UK - Reinsurance broker Bradstock Group is set to close its final salary scheme to new members after announcing a £14m pension fund deficit.
Its preliminary results for the year to the end of September showed that a total of £4.3m had been paid into the scheme during the year. An additional provision of £8.5m was made in respect to the deficit for employees who have left the firm.
Difficult trading conditions forced Bradstock to sell off a sizeable chunk of its business including interests in Australia, India and France.
Bradstock’s preliminary report said: “In view of the considerably larger deficit in the pension scheme, it is apparent that there is no reasonable prospect of the deficit being met from trading profits in the forseeable future.
“Consequently, the board has recently put a proposal to the trustee of the pension scheme in the hope that a final agreement can be reached that will be mutually beneficial to both the pension scheme and the group.” Company results due to be released this week are expected to show that FRS17 has made the deficit even greater.
Watson Wyatt partner Robert Hails warned that FRS17 will increase the chances of more companies generating deficits.
Hails said: “FRS17 is going to require companies to include asset and liability figures in the notes to this year's company reports. With the current investment conditions at December 31, 2001, asset values were relatively low.
“Any companies with high equity content in their pension scheme investments are likely to be showing a much lower financial position on an FRS17 basis relative to their normal funding position.”
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