UK - Packaging giant Rexam may be forced to end its pension scheme contribution holiday after surpluses have plummeted to £15m.
The company is expected to stop its contribution holiday after the next formal actuarial valuation. Its last formal valuation in 2000 showed a net surplus of £516m but this had plunged to £139m in January this year.
Although the group did not reveal FRS17 figures in its interim results, assets at December 31 stood at just over £1bn for the company’s UK schemes and £1.4bn for its other schemes – with a total net FRS17 surplus of £1.4bn.
A statement in Rexam’s interim results said: “When the funds are formally valued in 2003, the group’s actuaries will make recommendations on future cash contribution levels. Depending on market conditions it is possible that the contribution holiday may reduce in the foreseeable future.”
Rexam added that it is expected to adopt FRS17 fully in 2003, although this could change depending on the Accounting Standards Board (ASB) decision on its implementation in the run up to IAS19.
The company noted that the adoption of FRS17 was to have a significant impact on reported profits, saying its interest account was likely to show greater volatility from year to year as market values of scheme assets changed.
The Rexam Pension Plan has about 2900 active, 13,800 deferred and 11,000 pensioner members. It is advised by Mercer Human Resource Consulting.
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