Mercury defends pension fund aims

MERCURY ASSET Management considered the downside performance threshold governing the Unilever pension fund was no more than a point at which Unilever would start asking questions, the High Court has heard.

Unilever is suing Mercury for £130m over the poor performance of its pension fund in 1997 and 1998.

Former Mercury director John Richards said he believed Unilever would become 'uncomfortable' if the downside tolerance level, which required the fund to avoid underperforming its benchmark by more than 3%, was breached.

Richards also said he did not believe the objective of the fund had changed as a result of the new mandate given to the investment firm by Unilever in November 1996. The mandate set an upside performance target of 1% over the benchmark while not underperforming it by more than 3%.

'The key objective was still to outperform over the longer period,' he said. He did not know Unilever put equal emphasis on both targets. The trial continues.