British American Tobacco pension schemes' net liabilities almost double in a year
British American Tobacco’s (BAT) overall net liability for its pensions and healthcare schemes in group subsidiaries nearly doubled in the year to 31 December 2019 to £1.03bn from £518m the year prior.
The firm's full year results revealed the increase may be largely attributed to lower discount rates in the US and the UK, and the agreement with the Pension Insurance Corporation (PIC), whereby the trustees of the BAT UK Pension Fund agreed to acquire an insurance policy that operates as a UK find investment asset.
The £3.4bn buy-in with PIC was announced in August last year, and secured the benefits of 10,600 members, including 8,300 pensioners and 2,300 non-pensioners. At the time, it was the largest buy-in transaction including pensioner and deferred members.
The results also showed that the total funded scheme liabilities at the end of the year sat at £11.7bn from £11.3bn the year prior, while the value of scheme assets declined from £11.9bn in 2018 to £11.8bn.
The company saw strong operational performance over the course of the year, with revenue sitting at £25.9bn, up 5.7% from 2018.
Chief executive Jack Bowles said: "I am delighted with the progress we have made in all areas. Looking into 2020, we are confident of another year of high single figure adjusted constant currency earnings growth."
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