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New inflation deal agreed for pre-1997 Reuters Pensions

Older RPS and SPS pensioners will be able to breathe a small sigh of relief after their 2.5% annual cost of living increase agreement was extended for another three years to 2027.

The deal between the RPF/SPS trustees and the London Stock Exchange Group (LSEG) was announced on April 18 following a vigorous lobbying campaign by the Pension Review Group (PRG).

The RPF/SPS trustees announced the extension of the three-year inflation deal on their website.

It follows lengthy discussions between the trustees and the LSEG, which became the sponsor of the two Reuters UK-based defined benefit schemes when it bought Refinitiv, the former financial data arm of Thomson Reuters.

The agreement provides for an annual cost of living increase to a maximum of 2.5% on RPF and SPS pensions earned before 1997. These pensions are not covered by government rules that mandate annual cost of living increases after 1997, and are thus at the mercy of so-called discretionary agreements between the trustees and the sponsoring company, the LSEG.

PRG was set up in the early 2000s when Reuters stopped paying annual increases on pre-1997 pensions. Several years passed before a 10-year 2.5% inflation deal was reached with the then merged Thomson Reuters. This was extended for three years during the Blackstone period, but the deal expired this year.

With older RPF and SPS pensioners facing a bleak future of no annual increases and incomes steadily reduced in value by inflation, the PRG returned to active lobbying. A new website was built, new active members recruited, the pensioners’ mailing list updated and contact renewed with the trustees.

PRG relations with the trustees have remained cordial and cooperative throughout. While disappointed that it did not achieve its aim of a higher annual increase to compensate for the years of zero or below inflation awards, with the inflation rate dropping to a more acceptable level, the PRG said it believed that what it obtained was probably the best deal available, and did include a degree of longevity.

The trustees did argue forcibly, and successfully, for the  deal to include the LSEG taking responsibility for the payment of annual administration costs of the two funds, totalling £3.4 million. If  the funds had to cover their own admin costs, this could have impacted negatively on the 2.5% pay deal.

The latest triennial valuation of the funds’ assets and liabilities shows both in surplus, as are many DB (defined benefit) pension schemes at the moment, thanks to higher interest rates and investment returns. Most were in deficit during the years of low interest rates when sponsoring companies had to stump up funds to cover liabilities.

The latest valuations show RPF with a £103 million surplus and a 106.4% funding level. SPS, the much smaller executive fund, is also in surplus. Agreement on the renewal of the 2.5% inflation agreement is reckoned to cost the funds £18 million. This will be covered by the current surpluses, so LSEG will not have to contribute.

You can view the news item from the Reuters Pension Fund Trustees on the website. ■

Pension Review Group