Merrill faces new pensions row

TRUSTEES of the Surrey County Council pension fund will discuss at a meeting next month whether to sue Merrill Lynch for the alleged underperformance of part of the £700m portfolio.

Council officers have been looking into the question since the investment bank struck a £70m out-of-court settlement with the Unilever pension fund in December.

Mercury Asset Management, now part of Merrill Lynch, managed one third of the council's pension fund from 1990 until 1998. The trustees believe the portfolio run by Mercury underperformed its target by 2.2% a year in the five years to December 1997. Unilever's High Court case against Mercury was based on the performance of its fund in 1997 and 1998.

A council spokesman said investigators had yet to determine whether the Surrey fund had been managed by Alistair Lennard, the 27-year-old who ran the Unilever portfolio at the time in question. 'They have been trying to understand who controlled what and what the risk assessment was of the portfolio,' he said. 'Whether Lennard managed it is one of the areas we are looking at.'

Merrill said after the Unilever case there was 'no basis for any other claims against it'.