Smiths Group Increases Contributions To 2 Pension Schemes

7th Jul 2010 07:39

By Vladimir Guevarra Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Industrial conglomerate Smiths Group PLC (SMIN.LN) Wednesday said it is increasing contributions to its two major U.K. pension schemes--which recently showed a total deficit of GBP655 million--with the condition that it may reduce its contributions should the pensions schemes' funding improve in the coming years. Smiths Group said the Smiths Industries Pension Scheme had a funding deficit of GBP545 million as of March 31, while the TI Group Pension Scheme had a deficit of GBP110 million as of April 5 this year. The company said that "these reflect both prudent assumptions and the depressed market value of assets at the time" and that there has since been an increase in asset values and the funding position of the schemes has improved accordingly. The funding plan requires Smiths to contribute GBP36 million a year for 10 years to the SIPS scheme, subject to valuations every three years. This is higher than the GBP33 million annual contributions made previously. Smiths will invest GBP25 million in index-linked gilts that will be held in an escrow account with a further ongoing monthly investment of GBP2 million for nine years starting July 2011. This escrow account will remain a company asset until 2020 subject to the funding position of SIPS at that time. The money may be returned to Smiths sooner if future valuations show a funding surplus. Smith said this arrangement "provides a contingent funding commitment to SIPS without locking the investment into the scheme should its funding position improve." Smiths said it will contribute up to GBP50 million to the TIGPS scheme in May 2012, with further instalments of GBP8 million after every two years. This is subject to the funding position of the scheme in the six months ending March 2012. In April, the SIPS scheme had around 27,000 members, including 14,000 deferred members and 13,000 pensioners. TIGPS had around 36,000 members, including 16,500 deferred members and 19,500 pensioners. -By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0) 2078429486, [email protected] (END) Dow Jones Newswires July 07, 2010 02:39 ET (06:39 GMT)