BAE SYSTEMS PLC
13 June 2006
BAE Systems completes revised UK pension funding arrangements
13 June 2006
BAE Systems has completed a programme of measures to address the £3.1bn funding
deficits in its principal UK pension schemes.
In the accounts published for the year ended 31 December 2005 the company had a
total pre-tax pension deficit of £5.3bn, as defined under the IAS 19 accounting
standard and £4.1bn net of allocations to equity accounted investments. The IAS
19 deficit of £5.3bn, was estimated to have reduced to circa £4.2bn as at the
end of May 2006 on an unaudited basis.
At the latest valuation dates the aggregate of deficits across the four
principal UK schemes, prepared for the purpose of setting cash contributions,
was £3.1bn.
Addressing the funding deficit in these schemes has been achieved through a
combination of measures shared between the company and employee scheme members.
Annual contribution rates have been increased for both employees and the
company. In addition, employees have agreed changes to benefits to reduce
future liabilities and the company has agreed additional one-off contributions
of cash and assets to the schemes.
The revised funding arrangements include one-off contributions by the company
totalling £1,087m comprising the transfer of assets and cash. £661m will be
contributed in 2006 with the balance over 10 years. The cash contribution in
2006 will be £181m.
The result of these changes is an affordable solution that retains the valuable
and highly regarded defined benefit pension arrangements for those employees who
were offered such terms when they joined the company.
Commenting on the completion of the new funding arrangements Mike Turner, Chief
Executive BAE Systems plc said: 'Pension scheme funding has been a challenge
for the company but I am delighted that we have now completed these revised
arrangements through the constructive approach of all concerned. We have worked
in close consultation with our Employees, Trades Unions and Scheme Trustees to
develop pension arrangements acceptable and affordable to both the company and
its people.'
Issued by:
BAE Systems plc
London
Investor enquiries: 44 (0) 1252 383730
Media enquiries: 44 (0) 1252 384719
This information is provided by RNS
The company news service from the London Stock Exchange
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