The trustee of the £1bn De La Rue Pension Scheme has agreed to bring forward an actuarial valuation of the scheme after the sponsor provided the fund with a guarantee.
The trustee said it would bring forward an actuarial valuation of the De La Rue Pension Scheme to 5 April 2021, rather than the originally scheduled date of 31 December 2022.
De La Rue said the results of the latest 5 April 2021 actuarial valuation show a reduced scheme deficit of £119.5m. This compares with the schedule of deficit repair contributions, agreed with the trustee in May 2020, totalling approximately £177m from April 2021 to March 2029.
As a result of this new valuation, the scheme actuary has confirmed that the deficit can be funded through contributions remaining flat at £15m per annum from April 2022 to March 2029.
De La Rue and the scheme's trustee have also agreed a new schedule that avoids a step up in contributions from £15m to £24.5m for the period April 2023 to March 2029.
The company will make deficit repair contributions of £15m annually during that period. In aggregate, this agreement will result in a £57m reduction in cash payments to the scheme by De La Rue.
To enable this move, De La Rue has entered into a guarantee with the trustee that provides the scheme with an equal "pari passu" guarantor recourse ranking to the group's bank facility agreement.
In addition, De La Rue has committed to engage with the trustee should the company be considering any significant transactions that may potentially lead to material detriment to the scheme and the trustee will have a consent right where De La Rue incurs priority financial indebtedness beyond that permitted by its principal banking facilities.
Finally, De La Rue has confirmed its support in principle to both medium- and long-term strategic objectives of the trustee in terms of partial buy-in/ full buyout of the scheme, subject to appropriate pricing and commercial terms.
De La Rue chief executive Clive Vacher said: "I am delighted that we have reached agreement with the trustee that continues to honour the commitments we made back in 2020 to pay off the Scheme deficit by 2029, and also introduces further substantial protections for members of the Scheme. At the same time, a £57m reduction in cash contributions to the Scheme will clearly benefit the group's projected future cash generation."
See also: A look at the De La Rue battle over final salary rules
