QinetiQ announces today that it has reached agreement with the Trustees of its UK defined benefit pension scheme for the triennial actuarial funding valuation and other measures designed to reduce the funding deficit and improve the security of the scheme.
Following the judgement of Mr Justice Vos in the High Court on 14 March 2012, the Trustees are selecting the Consumer Price Index (CPI) as a suitable cost-of-living index for increases to pensions in payment and the revaluation of deferred benefits.
The actuarial impact of the change in index is estimated to be a reduction in the funding deficit of approximately £109 million. This is reflected in the result of the triennial funding valuation as at 30 June 2011 which has now been finalised with a net funding deficit of £74.7 million. A level of contributions has been agreed with the Trustees which is designed to eliminate the funding deficit, with QinetiQ making annual contributions of £13 million to 31 March 2018.
The following measures have been agreed with the Trustees to reduce the funding deficit and improve the security of the scheme:
An immediate one-off payment by QinetiQ of £40 million into the scheme.
A new asset-backed funding structure, secured on certain QinetiQ UK property, which will provide a yield of approximately £2.5 million cash per annum for 20 years to the scheme (index linked annually by reference to CPI). This is included in the £13 million recovery plan contributions.
A 20-year deed under which QinetiQ Group plc will assume the on-going liability for the scheme in defined circumstances such as the insolvency of participating employers.
About the QinetiQ UK defined benefit pension scheme:
The QinetiQ UK defined benefit pension scheme currently consists of approximately 2,300 active members, 3,500 deferred members (former employees with vested benefits that have not yet come into payment) and 2,400 pensioner members (former employees currently receiving a pension.) Other UK employees are members of the QinetiQ UK defined contribution pension scheme which consists of approximately 2,650 members.
The UK defined benefit pension scheme has been closed to the majority of new entrants since inception in July 2001. The previous triennial funding valuation dated 30 June 2008, showed a net funding deficit of £111 million, with QinetiQ making annual deficit contributions of £13 million under a 10 year recovery plan.
Notes for Editors:
A FTSE250 company, QinetiQ uses its domain knowledge to provide technical support and know-how to customers in the global aerospace, defence and security markets.
QinetiQ will announce its preliminary results for the year ended 31 March 2012 on 24 May 2012
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