BAE Systems has announced it will be closing its UK-based defined benefit pension schemes to new joiners after reporting that its liabilities had increased by £1.1billion.
The defence, security and aerospace systems firm is also waiting on approval from The Pensions Regulator to sustain its 15-year recovery plan to plug the funding gap in its two main schemes and two of its smaller schemes in the UK. This will see £200 million put in over five years and £800 million over the next ten years.
Delivering the organisation’s preliminary results for 2011, Peter Lynas, group finance director, at BAE Systems, said: “Over the year, liabilities have increased by £2 billion. The year’s discount unwind accounts for £1.1 billion of this increase and a further £0.3 billion arises from changes in assumptions primarily relating to mortality increases.
“Real discount rates reduced by the net of lower bond yields and lower inflation assumptions and this accounts for the rest of that increase.
“While the funding deficit has increased only slightly to some £3 billion it is £1.1 billion higher than would have been expected three years ago due primarily to the lower discount rates and the resulting increase in liabilities.”
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