Former Ericsson pensions chief struck off by regulator
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Your support makes all the difference.The Pensions Regulator used new powers enabling it to ban pension fund trustees for the first time yesterday, striking off the former head of Ericsson's UK employee benefits scheme for attempting to bolster the pensions of a string of executives.
David Foster, who was also head of the firm's human resources in the UK, was found to have lied to the group's Swedish parent company two years ago in an attempt to increase the pensions of the UK directors by a total of £13.4m.
The deception took place at the beginning of 2005, when Mr Foster set about trying to reduce the future liabilities of the Ericsson pension fund, which had a deficit of some £48m at the time. The trustees planned to offer deferred members of the scheme - those yet to retire - the option of transferring their pension pot out of the scheme at a rate of 110 per cent of its present value. Nine UK executives were also to be granted credit for an extra five years of service if they went ahead with the transfer.
The Swedish company approved the plans and provided some £24m to pay for the enhanced transfers. However, its calculations were based on false statements by Mr Foster regarding the set-up of the pension scheme. He told the parent company that the executive pension scheme was accrued at a rate of one-thirtieth for every year worked and that directors could retire from the age of 50 onwards without reducing their entitlement. In fact, the scheme terms were not nearly as generous.
Mr Foster was caught out by the scheme's administrator, who reported him to the regulator during the summer of 2005. He resigned a few weeks later.
Commenting on the ruling yesterday, June Mulroy, the Pensions Regulator's executive director of business delivery, said: "David Foster abused the huge responsibility of trust invested in him by Ericsson and let down the members of the pension scheme. It is absolutely right and proper that he has no further involvement as a trustee of any pension scheme."
Mr Foster also tried to set up a new fund for himself, which was to benefit from the more beneficial terms he had created. All monies transferred were later reclaimed by the scheme.
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