Reuters pension funds resume discretionary increases

Pension increases will be paid in line with increases in the UK Retail Prices Index up to a maximum of 2.5 per cent for each of the next 10 years. The increases will be backdated to 1 January 2012, though they are unlikely to reach pensioners before May or June due to payroll deadlines.

Friday’s announcement by trustees of Reuters Pension Fund (RPF) and Reuters Supplementary Pension Scheme (SPS) followed completion of negotiations with Thomson Reuters on the funds’ December 2010 actuarial valuations. The negotiations also included a fresh look at the parent company guarantees for the two defined benefit schemes, which are closed to new members.

Greg Meekings, pictured, chairman of both funds, said: “I am pleased to say that we have maintained our prudent valuation assumptions and we have agreed a plan with the company to make good the deficit at 31 December 2010 over the next eight years. We have also agreed a substantial increase in the level of Parent Company Guarantee…” The guarantee provides additional support from Thomson Reuters in certain circumstances where the principal employer, Reuters Ltd, is no longer able to support the funds.

The additional discretionary increases are consistent with those provided in pensions being earned by current Thomson Reuters employees who are members of the funds. The increases are being funded by the company, which is also funding the deficit incurred since the height of the credit crisis in 2008.

Meekings described the arrangement regarding pensioner discretionary increases as satisfactory and “a generous settlement”. He thanked Tom Glocer, who stepped down as chief executive at the end of 2011, and the Thomson Reuters management team.

“Tom stood by his commitment that the company would find a solution to the provision of discretionary pension increases from the Fund. I’m sure we would like to wish him all the best for his future now that he has retired,” he told fund members.

Pensioners have been vocal in campaigning for restoration of discretionary increases, whose absence over much of the past decade has eroded the value of their pensions.

The Pension Review Group formed in 2004 by RPF and SPS members concerned about the performance of the two funds says that since 2002 the purchasing power of their pensions has fallen by 23.3 per cent. For 2008-2011, Reuters pensioners would have needed an increase of up to 14.4 per cent to cover inflation.

The PRG welcomed the new agreement, which it said provides a degree of certainty of an increase for the next 10 years.

“Obviously, we would have hoped for larger increases each year when the September inflation figures are higher than 2.5 per cent, and also compensation for the loss of value to our pensions over the years when there has been no increase,” PRG chairman Angela Dean said. “However, we have to be realistic and recognise the tough economic climate in which our pension fund has to be managed.”

Meekings, in a talk to The Reuter Society on 6 March, endorsed the contribution made by the PRG over the last eight years, saying “the PRG has served us all very well” and adding that it was “a very valuable group”.

Dean said: “We should also acknowledge the achievement of the chairman of the Trustees, Greg Meekings, and his colleagues on the managing committees in reaching this settlement, as well the support from Thomson Reuters, and in particular from Tom Glocer, to enable a fair deal to be concluded.

“The PRG will not be disbanding, however, and will be monitoring pensions issues both within Thomson Reuters and trends externally.”

RPF, founded in 1893, is one of the oldest pension schemes and by far the larger of the two Reuters plans with net assets of £1,163,753,000 on 31 December 2010. On that date it had 7,774 members comprising 703 active members making contributions and accumulating benefits; 5,450 deferred members no longer making contributions but with benefits left in the fund for payment at a later date; and 1,576 pensioner members, including dependants of members who have died, receiving a pension.

SPS net assets were £178,252,000. The scheme had 191 members, of whom 12 were active members, 62 deferred members, and 117 pensioner members. ■