Diageo funding for UK pension

Diageo PLC
27 March 2006

                                                                   27 March 2006


          Diageo agrees funding  framework for UK pension fund deficit


Diageo has  agreed framework funding principles  with the Trustees of the UK
company pension scheme which provide for the company to fund the UK pension
scheme deficit over a 7-year period beginning in the 2007 financial year.


For the purposes of the agreement the value of the deficit, which will be
calculated using the trustees' actuarial valuation of the scheme, will be
ascertained through the planned 3-yearly valuation as of 31 March 2006.
Following the completion of that valuation later this year, the initial annual
cash contribution, which Diageo will make under this funding framework, is
estimated to be around £100 million. At 31 December 2005 the deficit in Diageo's
UK company pension schemes including unfunded liabilities and calculated under
IAS 19, was £653 million.


In addition to the deficit funding, Diageo will continue to make a cash
contribution in respect of annual benefits awarded to active members, which in
the year ending 30 June 2006 is expected to be £50 million. The agreed framework
provides for a reassessment of the funding position on a triennial basis and
allows for appropriate adjustments in company contributions in line with the
deficit at that time. These arrangements are not expected to lead to a change in
Diageo's previously announced share buy back programme.


Paul Walsh, Chief Executive of Diageo, commented:


'This funding framework, together with   changes we have made to the pension
scheme, demonstrate Diageo's commitment to provide a high standard of employment
benefits. It follows the sale of our shares in General Mills and our full exit
from Burger King and provides further clarity in relation to  Diageo's balance
sheet. '


                                     -ENDS-

Contacts:


Investor Relations: Catherine James [phone] [e-mail]


Media Relations:  Isabelle Thomas   [phone]  [e-mail]



Notes to Editor:


Diageo is the world's leading premium drinks business. With its global vision,
and local marketing focus, Diageo brings to consumers an outstanding collection
of beverage alcohol brands across the spirits, wine and beer categories
including Smirnoff, Guinness, Johnnie Walker, Baileys, J&B, Cuervo, Captain
Morgan and Tanqueray, and Beaulieu Vineyard and Sterling Vineyards wines. Diageo
trades in some 180 countries around the world and is listed on both the New York
Stock Exchange (DEO) and the London Stock Exchange (DGE). For more information
about Diageo, its people, brands and performance, visit us at www.diageo.com


                      This information is provided by RNS
            The company news service from the London Stock Exchange