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Ombudsman steps in to investigate Heineken 'promise' to Scottish & Newcastle pensioners

Thursday, December 22, 2011

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A pressure group for disgruntled Scottish & Newcastle (S&N) pension scheme members has confirmed that the Pensions Ombudsman is looking into its complaint against Heineken.

The dispute relates to a promise that Heineken allegedly made on pensions in 2008, during discussions to take over Scottish & Newcastle. Heineken is said to have committed itself to continue past practice of making discretionary increases to pensions in line with inflation.

Last year Heineken made a 2.5% increase to pensions, which was below the level of inflation.

The Ombudsman will look into the Scottish & Newcastle pensioners' claims that the Dutch firm made a "clear statement that it intended that discretionary pension increases would continue".

The pensioners have already taken their case to the House of Commons Select Committee on Business Innovation and Skills, which will scrutinise the matter early next year as an example of corporate governance practices after takeovers.

The pensioners set up a website earlier this year to co-ordinate their campaign. They have been encouraging pensioners to write to the Ombudsman since September.

A former director of Scottish & Newcastle, Tom Ward, is spokesperson for the campaigners. Ward said: "The public undertaking given by Heineken at the time of the S&N acquisition was unequivocal and clear.

"Heineken is a highly successful international business with the financial resources to meet its pension obligations. At the time of the deal, the Heineken management had a clear insight and understanding of the S&N pension fund and future funding requirements."

According to Heineken the Ombudsman's investigations have already been underway for months.

A Heineken spokesperson said: "We are fully aware that the Pension Ombudsman has agreed to impartially review complaints made by a number of S&N pensioners, indeed we informed those pensioners who were not satisfied with our direct responses to them, that this was a route that they may wish to take.

"Over the last few months, we have fully cooperated with the Ombudsman's office and provided detailed answers to any questions that have been put to us on the issue of discretionary increases."

The spokesperson continued: "Our position remains as it has always been, that where pensions are subject to discretionary increases, a decision on the level of such increases will be made on an annual basis and in light of prevailing circumstances. In November 2011, we announced a 2.5% discretionary increase for pensions which are subject to this provision.

"Overall, we have acted responsibly and in the best interests of all our pension stakeholders."

According to Pension Funds Online data, the Scottish & Newcastle Pension Fund just makes the UK's top 100. It is the 99th largest in the country with £2.18bn assets and some 18,000 pensioners.

The complaint relates to the defined benefit scheme which closed to future accrual in July.