UK - British Energy employees face uncertainty over the future of their pension scheme amid fears that the company may become insolvent.
The nuclear generator had a net FRS17 surplus on its £2.3bn schemes of only £5m at the end of March, but analysts believe market falls over the last three months have left the company facing a massive £375m shortfall.
The beleaguered company has agreed short-term guarantees worth £410m with the government and is in discussions regarding a longer term restructuring plan – although the future of the company is by no means certain.
British Energy said in a statement: “The board has reasonable grounds for believing that these discussions will be successful, but there can be no certainty that this will preserve value for investors.”
The company noted that if these discussions failed then it may still face insolvency.
If the company should become insolvent then current pensioners would have the first claim on any assets the scheme held – leaving current and deferred members to pick up any shortfall and possibly suffer a substantial reduction in their pensions.
British Energy’s two pension schemes – the British Energy Generation Group and the British Energy Combined Group schemes – have 5000 current, 2500 deferred and 8500 pensioner members. Currently, the company is paying contributions of 10% to BEGG and 12% to BECG with members contributing 5% and 6% respectively.
Neither Watson Wyatt, which advises the schemes, nor British Energy had any comment to make on the funding position.
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