Costain wants end to final salary pensions

26th Aug 2009 08:08

Costain said it expects full year results to be in line with expectations despite a drop in interim profit, but staff will be dismayed at its proposal to close its final salary pension scheme.The engineering and construction group said the scheme's deficit grew by £39.6m in the first six months of 2009 to £75.7m, reflecting an increase in future inflation expectations and lower bond yields.It pointed to 'increasingly disproportionate risks and costs' due to rising life expectancy, interest rate volatility and lower investment returns. The scheme, which has 800 members, was shut to new joiners in 2005.Profit before tax fell to £6.9m for the half-year ended 30 June 2009 from £10.1m before following previously anticipated reduction in net financing income. Revenue increased to £508.2m during the period from £467.5m before.Profit from operations rose to £8.3m during the period from £7.5m before. Chairman David Allvey said, "We entered the second half of the year with a record order book, robust finances and a net cash balance in excess of £100m. We look forward to reporting continued progress at the year-end in line with the board's expectations."The interim dividend has been increased to 0.275p from 0.25p previously.