UK - Chemicals group BOC Group is ending its 18-year contributions holiday after being hit by falling assets and rising liabilities.
It will now pay £33m into the £1.1bn BOC Pension Scheme over the next 12 months.
The scheme was 99% funded on a smoothed basis – using the SSAP24 accounting standard rule – when its actuary, Hymans Robertson, carried out a valuation at the end of March. But this had dropped to 87% by October.
Analysts believe the FRS17 shortfall – which has not been revealed by BOC – is likely to be even bigger as the scheme is heavily invested in equities.
The scheme currently has 78.6% invested in equities, 19.8% in bonds and 1.6% in others asset classes.
The only FRS17 figure released by the firm so far showed the fund’s position at the end of September last year. This revealed assets of £1.1bn and liabilities of £1.2bn.
BOC has also seen its liabilities increase after its discount rate fell from 6.1% in September 2001 to only 5.5% in 2002.
One pension analyst said: “BOC is another company resuming contributions after a long holiday. Other companies will find themselves in the same position with actuarial deficits and increasing contributions. BOC was hit by a double whammy – its liabilities increased and its assets fell at the same time.
“Clearly it is all well and good to dismiss FRS17 deficits as virtual, but BOC clearly shows that it is only a matter of time before the actuarial valuation catches up with you and you have got to increase your contributions.”
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