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Former Island Life boss wins pension surplus appeal
Published: Thursday July 12, 2012 | 8:57 am Comments 0
Barbara Gayle, Justice Coordinator
The United Kingdom Privy Council has upheld a Court of Appeal ruling that the trustees of the Island Life Insurance Company Limited pension fund, which was wound up five years ago, must pay J$6.8 million from the surplus to Island Life's former president Michael Fraser.
The ruling was handed down today.
Fraser was initially paid J$866,688 but he disagreed, saying the calculation did not incorporate all the funds he had put into the pension plan, and that his entitlement was closer to J$6.8 million from the J$65 million surplus in the scheme at June 30, 2005.
In October 2000, Fraser requested that the $14. 7 million which he had in the pension fund with the then Life of Jamaica (LOJ) be transferred to the Island Life Pension Scheme.
He received a confirmation letter and subsequent statements from the Island Life Pension Fund, confirming that the money was transferred.
In 2006 The trustees, Jacinth Kelly, Millicent Campbell, Claudia Davis, Courtney Miller and Ernel Lewis, filed a claim in the Supreme Court seeking a declaration that Fraser was entitled only to the lower figure, estimated against contributions paid into the fund from his Island Life salary.
Fraser was employed to Island Life on February 1, 2000 and became a member of the pension plan a month later, on March 1.
Three years after Fraser was hired to run Island Life, the company was merged with the former Life of Jamaica (now Sagicor Life Jamaica), after both were acquired by a Barbadian insurance operation that later rebranded as Sagicor Financial Corporation.
On February 28, 2003, the positions of some employees of Island Life were made redundant while others were transferred to Life of Jamaica (LOJ).
Duggan Consulting Limited, a firm of actuaries, was subsequently engaged to prepare a winding up valuation report to determine the level of surplus in the pension plan and the amount to be distributed to each beneficiary.
Island Life resolved on September 17, 2003 not to claim entitlement to any portion of the surplus.
It was also agreed that the surplus would be distributed to each member, pensioner, deferred pensioner and other beneficiaries in proportion to the liabilities at February 28, 2003, the discontinuance date.
The trustees learned, after deciding to discontinue the pension plan, that on or about October 17, 2000, Fraser’s pension which he had with LOJ had been transferred to the Island Life scheme.
Aston Duggan, an actuary, said in the Supreme Court that if he were not instructed by the trustees to omit Fraser's $14.7 million, he would be entitled to $6.8 million from the surplus.
The trustees said that Fraser's money was invested in Island Life's diversified Investment Fund as part of a United States denominated pool.
In 2008, the Supreme Court ruled that Fraser was not harmed as a result of the trustees' decision and was therefore entitled to the lower sum.
Fraser appealed the ruling and in 2010, the Court of Appeal comprising its president Justice Seymour Panton, Justice Hazel Harris and Justice Norma McIntosh overturned the Supreme Court ruling.
The Court of appeal said that a detriment or harm had been done to Fraser by the mere fact that the trustees made use of his money and then denied him the appropriate benefits.
The Privy Council in dismissing the trustees' appeal ordered that Fraser's legal costs should be paid from the pension fund.
barbara.gayle@gleanerjm.com
Published: Thursday July 12, 2012 | 8:57 am Comments 0
Barbara Gayle, Justice Coordinator
The United Kingdom Privy Council has upheld a Court of Appeal ruling that the trustees of the Island Life Insurance Company Limited pension fund, which was wound up five years ago, must pay J$6.8 million from the surplus to Island Life's former president Michael Fraser.
The ruling was handed down today.
Fraser was initially paid J$866,688 but he disagreed, saying the calculation did not incorporate all the funds he had put into the pension plan, and that his entitlement was closer to J$6.8 million from the J$65 million surplus in the scheme at June 30, 2005.
In October 2000, Fraser requested that the $14. 7 million which he had in the pension fund with the then Life of Jamaica (LOJ) be transferred to the Island Life Pension Scheme.
He received a confirmation letter and subsequent statements from the Island Life Pension Fund, confirming that the money was transferred.
In 2006 The trustees, Jacinth Kelly, Millicent Campbell, Claudia Davis, Courtney Miller and Ernel Lewis, filed a claim in the Supreme Court seeking a declaration that Fraser was entitled only to the lower figure, estimated against contributions paid into the fund from his Island Life salary.
Fraser was employed to Island Life on February 1, 2000 and became a member of the pension plan a month later, on March 1.
Three years after Fraser was hired to run Island Life, the company was merged with the former Life of Jamaica (now Sagicor Life Jamaica), after both were acquired by a Barbadian insurance operation that later rebranded as Sagicor Financial Corporation.
On February 28, 2003, the positions of some employees of Island Life were made redundant while others were transferred to Life of Jamaica (LOJ).
Duggan Consulting Limited, a firm of actuaries, was subsequently engaged to prepare a winding up valuation report to determine the level of surplus in the pension plan and the amount to be distributed to each beneficiary.
Island Life resolved on September 17, 2003 not to claim entitlement to any portion of the surplus.
It was also agreed that the surplus would be distributed to each member, pensioner, deferred pensioner and other beneficiaries in proportion to the liabilities at February 28, 2003, the discontinuance date.
The trustees learned, after deciding to discontinue the pension plan, that on or about October 17, 2000, Fraser’s pension which he had with LOJ had been transferred to the Island Life scheme.
Aston Duggan, an actuary, said in the Supreme Court that if he were not instructed by the trustees to omit Fraser's $14.7 million, he would be entitled to $6.8 million from the surplus.
The trustees said that Fraser's money was invested in Island Life's diversified Investment Fund as part of a United States denominated pool.
In 2008, the Supreme Court ruled that Fraser was not harmed as a result of the trustees' decision and was therefore entitled to the lower sum.
Fraser appealed the ruling and in 2010, the Court of Appeal comprising its president Justice Seymour Panton, Justice Hazel Harris and Justice Norma McIntosh overturned the Supreme Court ruling.
The Court of appeal said that a detriment or harm had been done to Fraser by the mere fact that the trustees made use of his money and then denied him the appropriate benefits.
The Privy Council in dismissing the trustees' appeal ordered that Fraser's legal costs should be paid from the pension fund.
barbara.gayle@gleanerjm.com