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Pension Funds demand compensation from Henderson

30 pension funds have lost £350m in supposedly low-risk investments with the firm.

UK investment company Henderson has been issued a two-week ultimatum to compensate 30 pension funds which have lost £350m in a low-risk investment venture that took a downturn, reports The Times.

The pension funds have made a written request to Henderson demanding compensation within the stipulated period, failing which they will begin legal proceedings.

The funds, which include the RailPen railway workers' scheme and the British Steel Pension Plan, are collectively responsible for the retirement incomes of hundreds of thousands of people.

In 2006, Henderson successfully acquired construction company John Laing for £1bn. It put the John Laing shares into a new infrastructure fund, hoping that the latter's Private Finance Initiative - for building and maintenance of schools and hospitals - would be a safe investment option for pension funds.

But high debt and a deficit blowout in the John Laing staff pension scheme led to investors losing 60 per cent of their money.

The pension funds say that Henderson had exposed them to liabilities by investing their capital in an operating business. According to them, the fund was misrepresented to them as low risk.

Henderson will contest the proceedings and has said that it is not at fault, since investing in operating businesses was within the limited partnership agreement of the fund.