PENSION and investment specialists Merrill Lynch Investment Managers is reported to have paid around £ 40 million compensation to the Co-operative Group's pension fund to settle a long-running dispute over investment performance and the departure of key staff.
The Group's £ 2 billion pension fund announced a year ago that it was ending its 30-year relationship with MLIM and said it was seeking advice about possible legal action against the organisation regarding investment performance relating to the fund.
However in a brief statement released by the Co-op Group last week, both parties signalled that the dispute is over and confirmed that MLIM will be involved in the pension fund's revised investment management structure which came into place last month.
Nick Eyre, Co-operative Group Secretary and a trustee of its pension fund, said: `On behalf of the trustees I can confirm that we have resolved our dispute with MLIM amicably. We are not prepared to discuss any of the details or the issues involved, but can confirm that we will be resuming our business relationship with MLIM.`
However the Financial Times said the compensation is understood to be up to £ 40 million.
Following a recent review of the pension fund's investment manager structure, the Co-op Group say Legal and General, Deutsche, Fidelity and LaSalle continue their involvement, while Lazard, Bank of Ireland, Merrill Lynch, Western and State Street have also been appointed.
The fund continues to hold 35 per cent in bonds, but has reduced equity investments from 60 per cent to 55 per cent and increased direct property holdings from five per cent to 10 per cent.