A group of Sotheby’s former employees based in the U.K. are considering taking legal action after the auction house said it would move to end a longstanding pension plan.
Known also as a final salary pension, the plan pays out members a retirement income for life and often sees the employer making contributions to a fund. The amount received in retirement is calculated by salary and number of years worked at Sotheby’s. In many business sectors, existing pension schemes are scarce, with only the largest private employers and those in the public and government-controlled sectors still offering them.
Around 1,200 people are enrolled in Sotheby’s pension plan, which was formed in 1974. Five hundred of them are currently claiming a pension, the Antiquities Trade Gazette reported. In April 2004, Sotheby’s closed participation in the U.K. Pension Plan to new employees.
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Sotheby’s owner Patrick Drahi has moved to terminate the plan in a “full wind-up,” selling the plan to two insurance companies. A letter from Sotheby’s Trustees in December 2020 notified plan members of this change. Sotheby’s said in a corporate statement last year that the termination plan would be fully carried out in 2022. (A representative for Sotheby’s said the final stages of this transfer process were initiated in 2018, prior to Patrick Drahi’s acquisition of Sotheby’s.)
The Association of Sotheby’s Pensioners (TASP), a group of the plan’s members that was established in 2016, is now seeking considering taking legal action to combat the move. Scheme members were not informed of the change, however, until August 2014, Eileen Goodway, a TASP representative, told ARTnews. According to a 2015 SEC filing, the cumulative retirement benefits earned for the U.K. Pension Plan was $325.8 million.
TASP also claims that employees made financial plans based on false information and took lower salaries in exchange for long-term retirement benefits. Despite being notified in 2020 of the change, few details on how the changes would affect discretionary increases that pensioners see as vital to their security were given by the house’s trustees. “For the majority of members, this was not clear,” said Goodway in an email interview.
“U.K. staff often earned (and still do) half that of their American counterparts,” Goodway continued. “The reason for this was that U.K. company pensions were deemed better.” Staff brought on prior to 1997, who are the oldest and historically least well-paid members of the house, could be most severely impacted by the change in the pension plan, she said.
“The sort of defined benefit pension schemes that were commonplace a generation ago have become increasingly expensive,” a Sotheby’s representative said in an email to ARTnews. That type of plan, the representative continued, has “almost universally been superseded” across the country by a different plan called “defined contribution” that Sotheby’s now offers its employees.
Pension plans have been controversial in other parts of the art world, too. A similar situation recently unfolded for former and past staffers at the J. Paul Getty Trust, a nonprofit that oversees the Getty museums in Los Angeles. The trust, which has a $9.2 billion endowment, is seeking an insurance company to buy out its pension plan. Doing so would terminate the $336 million plan by the spring, Bloomberg reported. When the plan is terminated, its members will see U.S. government oversight of pension regulations disappear. The plan’s pensioners have been critical of the move, calling for it to be reversed in a letter to the trust’s president, James Cuno, on November 11. Christopher Hudson, a retired former publisher at the Getty and the Museum of Modern Art, described the board’s actions as “unnecessarily callous.”
Drahi bought Sotheby’s for $3.7 billion including debt in 2019. Known for taking drastic cost-cutting measures and leveraging debt in major investments, he recently secured a $600 million loan against the Sotheby’s purchase. The telecom mogul is currently considering a potential U.S. stock market listing for the auction house, having reportedly selected Goldman Sachs and Morgan Stanley to advise on the deal, according to Bloomberg.