Link to this page: http://www.socialistparty.org.uk/issue/397/4845
We won't see you in Courts!
IN A growing international trend, workers' pensions are being subject to cuts and ever-diminishing conditions while executives are receiving astronomical retirement packages. After the furniture store Courts - a prominent feature in most retail parks - recently went bust, it was revealed it had a massive shortfall in its workers' pension scheme.
The first Courts store was opened by Henry Court in 1850, but only became a worldwide chain after being taken over by the Cohen Bothers in 1945. Courts then built up the wealth of the Cohen family - their 50% stake in the company was at one point worth £400 million.
Until 2001, the company had a healthy pension scheme for workers and a separate - yet not so healthy - scheme for the Cohens and other top executives. Their pension scheme had been stretched by the over-zealous pay rises they were granting themselves.
The company directors saw this deficit, which might affect their retirement years, and knew they must do something about it. In a shrewd move they merged the two pension funds, failing to notify the workers of this until it had been completed. They also withheld the fact that the new combined scheme had eaten into the workers' £3 million surplus and left it in the red.
The current deficit is a colossal £30 million, due to numerous questionable transfers from the general fund to the personal pension plans of Courts' directors. £4 million was extracted within three years of the merger, despite it already being in deficit.
In March 2004, Howard Cohen, a company director, withdrew £4 million from the fund to finance his own pension months before the collapse. Bruce Cohen, a Chief Executive who retired before the company went bust, enjoys a wholesome pension of £230,000.
Yet while they luxuriate in their retirement, hundreds of Courts' workers face an uncertain future. Some Courts' workers, furious at their former bosses, set up an Action Group to campaign for an independent review.
Stephen Ross, who led the report, said the merger of the two pension funds "wasn't in the interests of ordinary scheme members" and that it could "increase" directors' benefits while "adversely affecting" the scheme overall (something the directors were surely aware of). Despite these admissions, however, Ross found "no evidence of wrongdoing".
He went on to say that the trustees "acted with reasonable care, taking independent professional advice where appropriate and having regard to the interests of all members of the scheme", and concluded the merger was legal.
In deeming the plundering transactions as legitimate, the review further infuriated workers, who see it as a whitewash. It also let the directors off the hook. While they have greedily eaten into their own workers' pension scheme, they face no rebuke; neither financially nor criminally.
Many workers use private pension schemes as a crutch due to the pitiful state pension, but as in the Courts case this has been knocked out from under them. The worrying trend is that Courts is not an exception. Lately, both Allders and Rover workers have also fallen foul to pensions collapses.
Around 90,000 workers in the UK have lost their final salary pension promises in the past few years. In many cases the shareholders and the directors - often the very people culpable for the demise - will receive generous payouts, while workers face economic uncertainty.
In The Socialist 16 June 2005: