Ombudsman rules against S&N pensioners’ claim

By MARTIN FLANAGAN
Published on 14/10/2012 00:19

THE UK Pensions Ombudsman has ruled against a campaign by tens of thousands of pensioners of former brewing giant Scottish & Newcastle who alleged they got “a raw deal” following S&N’s takeover by Heineken in 2008.

The S&N Pensions Group (SNPG) had taken the case to the Ombudsman relating to undertakings given by the Dutch brewer at the time of the takeover that it would continue a decades-long practice by S&N of providing inflation-linked pension increases.

Heineken paid such an increase in 2008, none in 2009 when inflation was virtually zero, but paid nothing for 2010 when inflation was running at 4 per cent and trading was tough.

But in his judgment on the organisation’s website, Pensions Ombudsman Tony King said: “The complaint is not upheld ... as [the company] reached a decision that was not irrational, perverse or in breach of its obligation of good faith”.

The company had always maintained the commitment was explicitly “discretionary” and it viewed each year on its merits. The Ombudsman accepted that the decision to not pay the inflation-linked rise was “distressing and disappointing” for pensioners and had been poorly communicated but was “not an improper decision”.

Stefan Orlowski, Heineken UK’s managing director since July 2009, said the company had been vindicated by the regulator’s determination. “We have been incredibly consistent. We have always held the same position. We feel we have always acted properly and the Ombudsman’s decision confirms that,” he said.

He also told Scotland on Sunday that Heineken had decided for the 12 months from November 2012 to award the full inflation-linked pension increase of 3.2 per cent.

Tom Ward, former S&N corporate development director and a spokesman for SNPG, said the group “welcomed” Heineken’s decision.

He said the tests applied by the Ombudsman on whether Heineken had “acted irrationally or perversely had been a high hurdle. But we would now trust that the company make the annual decision on pensions with this undertaking they gave firmly in mind”.