The Pensions Regulator has disqualified the former chairman of a pension scheme, prohibiting him from ever acting as a trustee of any trust-based pension scheme again.
David John Foster, previously chairman of the trustees of the Ericsson Employee Benefits Scheme and human resources manager, made false claims that executive members’ benefits accrued at a 1/30th rate and that they were entitled to unreduced benefits from the age of 50 years. He suggested that this was an existing entitlement, rather than proposals that needed approval from the parent company, despite knowing that this would have a negative effect on the fund.
Due to Foster’s misrepresentation of the pension benefits of executive members to Ericsson’s senior management, as much as £13.4m was added to transfer values, increasing pension liabilities of the final salary scheme andfor the sponsoring employer.
Without asking for approval from other trustee directors, Foster also apparently accepted a favourable second deferred pension for himself which could have impacted on the benefits of other scheme members.
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 trust-based pension scheme."
Foster’s actions were called into question in 2005 as the result of a whistleblower’s report. The Pensions Regulator appointed an independent trustee to the Ericsson scheme to secure funds and an investigation began. Planned executive transfers were cancelled and Foster’s second pension was held pending investigation. Two already paid transfers worth £2.46m were recovered by the sponsoring employer Ericsson Limited.
This is the first time that the Pensions Regulator has used its powers of disqualification.