Pensions

Long-term pension provision is one of the most significant challenges facing businesses today. As a responsible employer, we monitor developments in this area very closely. We also conduct regular valuations of our Defined Benefit scheme to ensure that we can meet our future liabilities. The last formal valuation was undertaken on 31 March 2010, when a deficit of £746.8 million was revealed. We agreed with the Trustees a ten-year repair plan with lump sum payments of c.£83 million by March 2011, c.£87 million by March 2012, and c.£90 million by March 2013, with annual payments increasing each year thereafter, concluding with a payment of c.£114 million by March 2020. Our next valuation will be on 31 March 2013.

We recognise that pensions form an important part of the remuneration package that we offer to our employees and this was a key consideration in 2009 when we undertook an extensive review of our pension schemes, with a view to limiting the risk of further large increases in pension liabilities. As a result of the review, we closed our Defined Benefit pension scheme to new starters, with a new, good quality, Defined Contribution arrangement being introduced for new recruits to the company from October 2009 onwards.

Our pension scheme has around 37,000 members. 23,500 of those people are pensioner members and around 6,400 are employees making contributions to some type of provision.

Nine trustees are responsible for managing the pension scheme and six of them are directly elected by the members. They are bound to act in the best long-term interests of all members. Although the trustees don’t impose any specific ethical investment restrictions on the fund managers, they do require them to monitor and report on the governance and behaviour of any companies they hold shares in.