Some Sotheby’s pensioners are considering taking their cases to the Pensions Ombudsman, alleging maladministration over the way the scheme was explained to them. The auction house has stopped paying inflation increases on pre-1997 pensions that pensioners thought were guaranteed and is now planning a scheme buyout without the increases, Mallowstreet.com reports.
Pensions accrued before 1997 do not legally need to be inflation-linked – except for the GMP (guaranteed minimum pension) part – though many schemes have this written into their rules.
The issue is coming into focus again as the consumer price index rose by 7% in the year to March and is expected to go even higher this year. It has been bubbling under the surface for some time; in 2017, a Westminster debate took place after former employees of Hewlett Packard and 3M protested about the lack of inflation adjustment of their pre-97 pensions, leading former pensions minister Richard Harrington to write to the chief executives of the respective companies, though he ruled out changing the law retrospectively.
Mallowstreet said ” the issue is coming to a head at Sotheby’s because the £313 pension scheme which had a surplus of £3.5 mln at end-2020 is looking to buy-out and wind up soon. This would make the lack of indexation on non-GMPs irreversible, eroding pre-97 pensions just as a cost of living crisis is threatening to plunge over a million people next year.”
See https://www.mallowstreet.com/Article/b66737 for the full story.
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