| Rentokil to pay 380 million pounds into pension fund |
|
|
LONDON: Rentokil Initial Plc. is undertaking to pay around 380 million pounds into its pension fund to cover the deficit. It said it will pay 200 million pounds immediately as part of a series of payments finally ending not later than January 2012.
The company is also planning to close its final salary pension plan to future accrual.
The pest control-to-security services company said in a statement that in view of a general trend of increasing longevity, which has adversely impacted the scheme, the company and trustees have agreed to a "more prudent basis for estimating longevity that will increase this deficit by an additional 24 million pounds. The changed regulatory environment for pensions requires the company to deal with these issues in a shorter timescale than it might otherwise have done." The company estimated the deficit at the end of November at 325 million pounds.
The trustees will review the scheme's investment strategy and suggest measures to reduce potential volatility caused by market movements.
In simple terms, the proposal means guaranteed benefits will remain at current levels, no matter how long members stay with the company.
The company admitted the plan involved removing future benefits from 3,000 employees, who are still in the scheme by next summer. Chief financial officer Andrew Macfarlane said the company will consult workers before pushing ahead with the plans, and stressed that the plan affected only 3,000 of its 48,000 employees.
The company is expected to make use of funds it had received from the recent sale of its conference business for the payment. It will also reduce future investment exposure to equities.
Rentokil had closed its final salary scheme to new members four years ago and its deficit has grown to become one of the largest in the country.
If the plan is implemented, the members of the final salary pension scheme will be offered membership of a defined contribution scheme so that they can continue to make plans for retirement.
Earlier, companies had resorted to closing the final salary pension schemes to new employees, but no large company had taken this step so far. The National Association of Pension Funds said other company pension schemes would increasingly have to follow Rentokil's approach.
Posted
on : Tue, 20 Dec 2005 08:20 GMT | Pensions News
By : Salim Patel
|
| |
| Related |
|
|
|
