ITV uses innovative funding approach to tackle pension deficitITV plc is the latest in a growing number of major businesses to implement Deloitte approach |
ITV today announced the implementation of a partnership using SDN Ltd - ITV’s wholly owned subsidiary, a UK digital terrestrial television (DTT) multiplex operator - to facilitate a £124m contribution to its pension scheme as part of a wider funding agreement with the scheme. This follows the recent announcement by John Lewis Partnership – which has used department stores to back a £95m contribution to its pension scheme.
Feargus Mitchell, the Deloitte pensions partner advising ITV, said: “Over the last 18 months, ITV has taken a number of steps to manage its pension risk. Now the use of the partnership approach has enabled ITV to improve the funding of its pension scheme for the benefit of its employees and pensioners in an efficient and cost effective way. It has facilitated a wider agreement with the pension scheme trustee that ensures certainty and stability around the funding of the scheme for the next four years.”
Deloitte is finding that there is significant demand for this approach1 and is currently advising more than 10 major companies on solutions to fund over £2bn of UK corporate pension deficits. This represents a step-change in pension funding and enables companies to use balance sheet assets, such as property, brands and investments to achieve immediate reductions in pension deficits. Unlike more conventional methods that contribute assets to schemes to fund deficits, the Deloitte approach provides the Trustee with a valuable economic interest whilst ensuring the underlying assets continue to be managed in an optimal way.
The pension crisis facing UK corporates continues and the current estimate of the combined FTSE 100 pension funding deficit is in excess of £100bn.2
Feargus Mitchell comments: “This represents a significant step forward in the funding of pension schemes and enables corporates to unlock the value in their assets for the benefit of both their pension schemes and their wider corporate stakeholders.”
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Notes for editors
- The Deloitte approach involves the pension scheme acquiring a stake in a partnership backed by corporate assets. The pension scheme then benefits from a secure source of income from the partnership, and the corporate can ensure the underlying assets continue to be managed in an optimal way.
- The cash funding deficit of the FTSE 100 estimated to be in excess of £100bn as at 23 March 2010.
About Deloitte Total Reward and Benefits Limited
Deloitte Total Reward and Benefits Limited is a multi-disciplinary consulting group comprising 100 actuaries and other pensions and benefits specialists, which focuses on delivering high quality pensions advice to employers and scheme trustees. Deloitte Total Reward and Benefits Limited is authorised and regulated by the Financial Services Authority.
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