UK - Drinks giant Diageo has dismissed fears about the health of its pension schemes despite plunging into deficit under FRS17.
And it has pledged to retain final salary provision because it helps recruit and retain staff.
The firm, which owns the Guinness, Smirnoff and Baileys brands, said a £1.34bn surplus on its UK, US and Irish pension schemes had been wiped out and there was now a £336m deficit under FRS17.
The schemes have assets of £5.6bn with the UK currently worth £3.2bn.
But while other schemes have moved to more defensive positions, Diageo has kept faith with equities and plans to retain its current asset allocation – 85% equities, 10% property and 5% venture capital.
Diageo UK pensions director Graeme Robertson said: “The trustees are constantly monitoring it. But this is not a particularly good time to change when shares are so low.
“You would just be locking in losses which the company is very aware of.”
He also revealed that the firm had no plans to resume paying contributions or to make up the shortfall.
Robertson, who dismissed the deficit as “virtual”, said: “There are no plans to inject any cash into the funds at the moment. It is just FRS17, it distorts things.”
Diageo added that unlike other firms, which have blamed FRS17 for the closure of their final salary schemes, its schemes would remain open.
Having a “great DB scheme” is a very important part of recruiting and retaining staff, it said.
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