BAE Systems plc (LON:BA) today announced that, after consultation with The Pensions Regulator in the UK, it has reached agreement with the Trustee Board of the combined scheme on the accelerated funding valuation and revised deficit recovery plan.
In October 2019, six of the Group’s nine UK pension schemes (including the two largest schemes) were consolidated into a single scheme.
Following that consolidation, the Company agreed with the new Trustee Board to bring forward the funding valuation of the combined scheme to 31st October 2019 from the previously scheduled date of 31st March 2020.
At the 31st October 2019 funding valuation date, the deficit was £1.9bn.
The current deficit recovery plan which runs to 2026 will be replaced by a new deficit recovery plan.
Under that revised plan:
· A one off payment of £1bn is to be made in the coming months – this will be debt funded.
· In addition, c.£240m of funding is payable in the scheme year ending 31 March 2020 and c.£250m by 31 March 2021, in line with existing commitments.
· The three smaller UK defined benefit schemes will conduct their triennial review on 31st March 2020, currently these schemes are in a surplus.
· Deficit contributions into the Group’s US schemes are expected to be $80m in 2020 and $40m pa for five years thereafter.