Pension Agreement with UK Tru

RNS Number : 9358O

Smiths Group PLC

07 July 2010

 

 

News Release

London, 7 July 2010

For immediate release

SMITHS REACHES PENSION AGREEMENT WITH UK TRUSTEES

Smiths Group plc and the Trustees of its two major UK pension schemes - Smiths  Industries Pension Scheme (SIPS) and the TI Group Pension Scheme (TIGPS) - have agreed 10-year funding plans.

These funding plans follow completion of the triennial actuarial valuations of the schemes at 31 March 2009 and 5 April 2009 respectively which showed deficits of £545m in SIPS and £110m in TIGPS at those dates.  These reflect both prudent assumptions and the depressed market value of assets at the time.  There has since been a substantial increase in asset values and the funding position has improved accordingly, which is reflected by the contingent nature of a significant element of the agreed funding plans.

The plans require the following separate contributions from Smiths Group:

·     Cash contributions to SIPS of £36m a year for 10 years, subject to subsequent triennial valuations.  This compares with £33m annual contributions made in respect of the previous triennial valuation.

·     An initial investment of £25m in index-linked gilts which will be held in an escrow account with a further ongoing monthly investment of £2m for nine years commencing July 2011.  The escrow account will remain a Company asset until 2020 subject to  the funding position at that time or may revert to the Company sooner should there be a surplus at an intervening triennial review.  This provides a contingent funding commitment to SIPS without locking the investment into the Scheme should its funding position improve.

·     A conditional cash contribution to TIGPS of up to £50m payable in May 2012, with further biannual instalments of £8m thereafter.  These payments may not be made, or paid only in part, subject to the funding position of the Scheme in the six months ending 31 March 2012.

The funding plans allow for contributions to be reduced in the event of improvements in the overall funding positions of the Schemes following future triennial valuations.  The use of the escrow account for SIPS ensures no material change to net cash outflows to the UK pension schemes prior to the date of the next triennial review.

As previously disclosed, the Group has already taken a number of measures in the past 18 months to reduce its exposure to post-retirement liabilities, including closing the defined benefit pension plans in the UK and US and capping its obligations for post-retirement healthcare benefits.

ENDS

Notes:  At the start of April 2010, SIPS had around 27,000 members, including 14,000 deferred members and 13,000 pensioners and TIGPS had around 36,000 members, including 16,500 deferred members and 19,500 pensioners.

Smiths Group also operates a defined benefit pension plan in the US which was closed on 30 April 2009 to which it currently contributes $20m a year.

Smiths Group www.smiths.com  is a world leader in the practical application of advanced technologies. It comprises five divisions - Smiths Detection, John Crane, Smiths Medical, Smiths Interconnect and Flex Tek - that supply products and services for markets in threat and contraband detection, energy, medical devices, communications and engineered components. Smiths Group employs around 22,000 people in more than 50 countries.

Media

Colin McSeveny

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Anthony Cardew - Cardew Group

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Investor Relations

Peter Durman

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END

 

 

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