Pension fund news anyone? Go on, you know you want to. New EMI owners Terra Firma have said they are confident they can quickly resolve a potential dispute between the music firm and trustees of its pension scheme, even though the trustees have taken the dispute to the UK pension regulators.
Trustees of the pension scheme at the London based major have been in negotiations with Terra Firma ever since they made their offer to buy EMI regarding the music company's commitments to the pension fund, and in particular claims that the major's contribution rate needs to go up to cover a short fall.
This week the trustees wrote to beneficiaries of the fund to tell them that those negotiations had so far not reached any agreement, explaining that: "despite its best efforts over a period of months, both preceding and immediately following the takeover, the trustees board...has not been able to reach agreement with the new owner regarding the funding of, and the security available to, the fund from 1 April 2006. Accordingly, the trustee has referred the matter to the pensions regulator, who will initiate the proper process for resolution under UK legislation".
But Terra Firma continue to deny any change in contribution rate is required. They told reporters in a statement last night: "Terra Firma is entirely confident that the scheme does not require an amendment to its contribution rate".
The UK pension regulator has considerable powers to force settlements on companies with regards their pension fund contributions, though they rarely use them because normally their mere involvement is enough to persuade firms and pension funds which are in dispute to reach a settlement. However, given Terra Firma's continued resolve that there is no need to change the current contribution rate, some commentators are speculating that this case may see the regulator take a more proactive role than normal.