UK - J. Sainsbury has been accused of trying to bury bad news about the health of its pension scheme after refusing to disclose its FRS17 position.
The retail giant’s 2002 interim report admits that the £1.9bn scheme has been hit by falling equity values.
But it says that it is 120% covered by the minimum funding requirement and has sufficient cash to meet current liabilities.
However, analysts say the company is trying to bury bad news and that its MFR figure does not sit easily with their own calculations of an FRS17 deficit of £1.1bn. This, they say, takes into account the fact that the pension scheme is invested 70% in equities.
They also point out that Sainsbury’s admitted that at the height of the equity market in April 2000, it did not have enough money to buy out pensions from an insurer.
Analysts say this indicates the weakness Sainsbury’s solvency levels and that its position will have deteriorated since then, due to falling assets and rising liabilities.
One City analyst said: “Sainsbury’s says the fund is 120% covered against the MFR. This is not much consolation, since the MFR is so weak. No serious company only funds to the MFR.”
Another senior pensions analyst said: “The MFR was technically discredited two years ago. In the US, they have a proper, sensible minimum funding requirement and companies will, from next year, have to start putting in billions of extra dollars.
“But our government has so neutered the MFR that in terms of extra cash, it’s not really great.
“You don’t have to be an actuary or a rocket scientist to work out something is wrong here.”
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.