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'Mitigation' if Blackstone deal impacts pension benefits negatively

Any negative impact of the Blackstone deal on member benefits of the two legacy Reuters pension funds will be "mitigated as much as possible," the chairman of the schemes said.

The UK Pensions Regulator will be involved if necessary, Greg Meekings (photo), chairman of the trustees of Reuters Pension Fund (RPF) and Reuters Supplementary Pension Scheme (SPS), said.

The two schemes’ trustees are engaging with Thomson Reuters and Blackstone over the impact of the sale of a controlling interest in the company’s financial and risk division (F&R) - the core terminals and data business acquired when the Thomson organisation bought Reuters in 2008.

Thomson Reuters directors on 30 January approved the $17 billion purchase of a 55 per cent stake in F&R by Blackstone, the world’s largest private equity firm.

The two pension schemes are to move to a joint venture between Blackstone and Thomson Reuters when the deal is completed. They expect that will be in the second half of this year. Thomson Reuters will have a minority interest of 45 per cent in the partnership.

Meekings was responding to a written question posed by a group of more than 50 RPF members currently working at Reuters who asked: “How do the Trustees intend to support contributing members of the RPF and how do they intend to represent their long-term interests?”

He said: “As you would expect, if the Trustees consider the proposed transaction negatively impacts the security of member benefits, they will ensure it is mitigated as much as possible (and involve the Pensions Regulator if necessary).”

Meekings said the primary duty of trustees “is to safeguard to the greatest extent possible the benefits which have already been earned by members and which we currently administer.” This involves working to ensure that the schemes are sufficiently strongly funded, taking into account the strength of the underlying covenant support provided to them.

It is proposed that Reuters Limited will remain the schemes’ sponsor, with that company forming part of the F&R business which will be controlled by the new partnership being established between Thomson Reuters and Blackstone.

“In relation to the future accrual of benefits following the proposed transaction (and whether employees remain with Reuters Limited, and therefore in active membership of the Schemes, or transfer to a new employer with no continuing link to the Schemes), this is an employment matter over which the Trustees will have neither control nor real influence,” Meekings said.

The Trustees’ role is to safeguard all benefits which have accrued in RPF and SPS - including the accrued (past service) benefits of those members who cease active membership.

“The Trustees will do all within their powers to maximise the protection of the accrued benefits of all members of the Schemes. A statutory role of the Pensions Regulator is to support the protection of accrued benefits in this manner. But as regards the future accrual of benefits, this will be driven primarily by discussions between employees and their current or proposed future employer regarding the proposed terms and conditions that will apply to their employment going forward. The roles of both the Trustees and the Pensions Regulator are limited in this area, as such questions relate to future employment terms, rather than the protection of accrued pension rights. The Trustees will, however, maintain an ongoing dialogue with Thomson Reuters and Blackstone in order to ascertain and understand their proposals in relation to future service accrual,” Meekings said.

He added: “The Trustees would like to reassure members that their discussions with Thomson Reuters and Blackstone to date indicate that both intend to take their responsibilities towards RPF and SPS seriously, and we are hopeful that an equitable outcome for all stakeholders will be achieved that appropriately protects member benefits for the long-term.” ■

Reuters Pension Fund