Sotheby’s owner Patrick Drahi to end employee pension scheme – ARTnews.com

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A group of UK-based former Sotheby’s employees are planning to take legal action after the auction house announced it would end a long-running pension scheme.

Also known as an end-of-career pension, the scheme pays participants retirement income for life and often sees the employer make contributions to a fund. The amount received on retirement is calculated according to the salary and the number of years worked at Sotheby’s. In many industries, existing pension schemes are rare, with only the largest private employers and those in the public and state-controlled sectors still offering them.

About 1,200 people are registered with the Sotheby’s pension scheme, created in 1974. Five hundred of them are currently applying for a pension, the Journal of the Antiques Trade reported. In April 2004, Sotheby’s closed participation in the UK Pension Plan to new employees.

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Sotheby’s owner Patrick Drahi decided to terminate the scheme in a “full wind-up”, selling the scheme to two insurance companies. A letter from the Sotheby’s trustees in December 2020 informed plan members of this change. Sotheby’s said in a company statement last year that the redundancy plan would be fully executed in 2022. (A Sotheby’s representative said the final stages of that transfer process were initiated in 2018, before the acquisition of Sotheby’s by Patrick Drahi.)

The Association of Sotheby’s Pensioners (TASP), a group of scheme members which was formed in 2016, is now looking to consider taking legal action against the decision. Program members were not informed of the change, however, until August 2014, Eileen Goodway, a TASP representative, said ART news. According to a filing with the SEC in 2015, the accrued pension benefits earned for the UK pension scheme amounted to $325.8 million.

TASP also claims that employees made financial plans based on false information and accepted lower wages in exchange for long-term retirement benefits. Although they were told in 2020 of the change, few details on how the changes would affect discretionary increases that retirees consider vital to their security were given by house administrators. “For the majority of the members, it wasn’t clear,” Goodway said in an email interview.

“British staff often (and still earn) half that of their American counterparts,” Goodway continued. “The reason for this was that British company pensions were considered better.” Staff hired before 1997, who are the oldest and historically lowest-paid members of the house, could be hardest hit by the pension plan change, she said.

“The type of defined benefit pension plans that were commonplace a generation ago have become increasingly expensive,” a Sotheby’s representative said. in an email to ART news. This type of plan, the representative continued, has “almost universally been replaced” across the country by a different plan called “defined contribution.” that Sotheby’s now offers to its employees.

Pension schemes have also been controversial in other parts of the art world. A similar situation recently unfolded for former and former staff members of the J. Paul Getty Trust, a nonprofit organization that oversees the Getty museums in Los Angeles. The trust, which has an endowment of $9.2 billion, is looking for an insurance company to buy out its pension plan. That would end the $336 million plan by spring, Bloomberg reported. When the plan is terminated, its members will lose US government oversight of pension plan regulation. Plan pensioners criticized the move, calling for it to be reversed in a letter to trust chairman James Cuno on November 11. Christopher Hudson, a retired former editor of the Getty and the Museum of Modern Art, described the council’s actions as “unnecessarily insensitive”.

Drahi bought Sotheby’s for $3.7 billion including debt in 2019. Known for taking drastic cost-cutting measures and leveraging debt into major investments, he recently secured a $600 million loan against the purchase of Sotheby’s. The telecommunications mogul is currently eyeing a possible US stock market listing for the auction house, having picked Goldman Sachs and Morgan Stanley to advise them on the deal, according to Bloomberg.

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