Coats Group has agreed with its UK pension trustees to defer the payment of its remaining deficit recovery contributions (DRCs) for 2020.
Around $17m (£13m) of DRCs due between April and December inclusive have been put on hold as the thread manufacturer took action to "underpin liquidity and maintain comfortable levels of headroom" amid the Covid-19 crisis.
Deferring or reducing pension contributions were among numerous easements granted by The Pensions Regulator (TPR) to pension scheme sponsors to aid companies in faring the economic crisis provoked by the pandemic.
The company had already made $8m of DRC payments in the first quarter, and catch up for the deferred payments is expected to begin in mid-2021 and be spread over a period of 18 months. Around $5m of annual administrative expenses will continue to be paid.
Overall Coats had a net defined benefit (DB) obligation of $141m on an IAS 19 basis as of 30 June, lower than the $181m figure reported at 31 December.
For the Coats UK Pension Scheme, there was a $54m (£43m) IAS 19 deficit at 30 June, compared to $92m (£69m) at the end of 2019. The company said the reduction related to $27m net actuarial gains from a lower discount rate due to lower corporate bond yields, as well as $6m of employer contributions. The scheme is due to begin its next triennial valuation process on 31 March 2021.
Last year, Coats consolidated its three UK schemes into the Coats UK Pension Scheme following years of regulatory action relating to the company's future support for the scheme.
A £255m settlement was agreed with TPR for two of the schemes in response to the issuance of a financial support direction. A separate £74m agreement was made for a third scheme. The regulator had been concerned over the implications of a corporate restructuring - but the settlement also resulted in Coats becoming the statutory employer for the schemes.
The true level of flexibility for defined benefit (DB) schemes that take the ‘bespoke’ option laid out in the proposed DB funding code needs further clarification, the industry has said.
Defined benefit (DB) transfer values continued to increase to yet another record high during July but the number of people opting to exit final salary schemes remains steady, according to XPS Transfer Watch.
Over a third of defined benefit (DB) schemes with valuations between September 2017 and September 2018 were in surplus, according to data from The Pensions Regulator (TPR).
Advice giant Quilter has set aside £24m to compensate British Steel workers advised to transfer out of their defined benefit (DB) pensions by Lighthouse, doubling its previous redress provisions.
Every month, several firms issue trackers of the aggregate defined benefit (DB) scheme funding position. See here for the July 2020 estimates on the various measures…