UK - Rolls-Royce has dismissed concerns surrounding the health of its UK and international pension funds, following news that the company has pension liabilities of £397m.
Under FRS17, Rolls Royce found that its UK pension schemes have liabilities of £284m, representing 6% of its assets under management. The shortfall on overseas schemes amounted to £113m. However, those liabilities are fully covered by existing provisions on the balance sheet, according to Rolls Royce.
The firm played down concerns over the health of its retirement plans, claiming that the only reason for the deficit was FRS17: “Under FRS 17 a snapshot is taken of pension fund assets and liabilities at a specific point in time. Thus, movements in equity markets and discount rates are expected to create volatility in the calculation of scheme assets and liabilities.”
The company added that under FRS17 it would only take a 15% improvement in the equity markets or a 1% increase to its discount rate to completely wipe out the deficits.
By Geoffrey Ho
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