Merrill Lynch 'faces new pensions case'

Sainsbury and Unilever got pay outs over their pension funds

Merrill Lynch, the US investment bank, is reportedly facing fresh legal action over its management of pension funds during the stock market boom of the late 1990s.

We don't know of any proper grounds for new claims

MLIM spokesman

Surrey County Council has hired lawyers to prepare a case against US investment bank Merrill Lynch over the handling of its staff pension fund, the Observer newspaper reported.

The Council intends to bring a case alleging that the pension fund underperformed during the stock market's buoyant years because of negligence by Merrill Lynch Investment Managers (MLIM), the newspaper said.

'No decision yet'

However, Nick Skellett, the leader of Surrey County Council, told BBC News Online that no decision has yet been taken on whether to bring a lawsuit.

"There's no decision on specific legal action. We're seeking advice, we think we've got a case," Mr Skellet said.

The Council's £300m staff pension fund was managed by Merrill Lynch Investment Managers (MLIM) until 1998. Last year MLIM reached an out of court settlement with Unilever's pension fund trustees after several days of court hearings which gripped the City of London.

MLIM did not admit liability in making that payment, thought to be at least £70m ($108m), or another one to retailer J Sainsbury in August this year.

MLIM agreed to pay J Sainsbury an undisclosed sum to drop claims against it over poor pension fund returns.

"We don't know of any proper grounds for new claims," a spokesman for MLIM told the Observer.

Mr Skellet said Surrey County Council's representatives have held discussions with MLIM about the pension fund performance "on and off, ever since we broke with them".

Several other ex-MLIM clients are believed to be preparing similar cases, including drugs firm AstraZeneca and the Co-Operative Group retailer.