Business
Pension Scheme Deficit
Pension Scheme Deficit.
About this update from Rentokil Initial Plc
[{"type":"text","content":"\n Rentokil Initial PLC\n19 December 2005\n\n\n19 December 2005\n\n\nRENTOKIL INITIAL plc ADDRESSES PENSION SCHEME DEFICIT\n\n\nIn its third quarter update on 3 November 2005, Rentokil Initial plc ('the\nCompany') announced that it was in discussions with the Trustees of the Defined\nBenefit (DB) Sections of the Rentokil Initial Pension Scheme ('the Scheme')\nregarding measures to address the Scheme's funding deficit and to ensure\nappropriate future funding levels. These discussions have resulted in the\ncompany proposing a series of positive steps which will deal with these issues\nand protect the security of the Scheme's benefits for its members.\n\n\nThe deficit of the UK Scheme under IAS 19 as at 30 November 2005 was estimated\nto be £325 million. In response to a general trend of increasing longevity,\nwhich has adversely impacted the Scheme, the Company and Trustees have agreed to\na more prudent basis for estimating longevity that will increase this deficit by\nan additional £24 million. An agreement has been reached between the Company\nand the Trustees to make an immediate payment of £200 million, with the\nremaining deficit being met by a series of payments ending no later than January\n2012. The changed regulatory environment for pensions requires the Company to\ndeal with these issues in a shorter timescale than it might otherwise have done.\nThe total funding required to address the deficit will be in the range of £370\nmillion to £380 million depending on the final timing of the payments.\n\n\nIn order to reduce the likelihood that the scheme deficit will increase\nmaterially in the future, following discussions with the Company, the Trustees\nwill be reviewing the Scheme's investment strategy, with the aim of reducing\npotential volatility that might be caused by market movements. This will result\nin a lower exposure to equities over time and improve the security of Scheme\nbenefits.\n\n\nWith immediate effect, the Company will be entering into a period of\ncomprehensive consultation with active members of the DB Sections of the Scheme.\nThe Company is proposing to close the DB Sections for the future accrual of\nbenefits for active members. The aim of this is to reduce exposure to future\nshortfalls and to ensure that the Scheme will be in a position to continue to\npay all benefits that have been earned t...