AkzoNobel pension deficits hit €1.5bn
UK/NETHERLANDS - Quarterly figures from Dutch paint and coatings firm AkzoNobel has revealed almost £20m (€23.3m) extra has been pumped into the ICI UK defined benefit (DB) pension fund following its latest funding valuation.
The firm, which provides access to a number of DB pension schemes, noted the total pension deficit for the firm had increased slightly to €1.5bn, up from €1.4bn at the end of the first quarter of 2009.
However, figures outlined in the analyst presentation showed the deficit has increased by more than €500m in the first half of 2009, from €988m at 31 December 2008 to €1.525bn at the end of June 2009.
AkzoNobel said the rise in the deficit was attributed to an increase in DB obligations of €325m because of higher inflation and a further €225m as a result of lower discount rates, although "top-ups" into the UK DB schemes of €250m helped to reduce the deficit.
However, Keith Nichols, chief financial officer (CFO) at AkzoNobel, said the expected 'top-up' contributions to UK schemes had increased from the expected level of £197m outlined in guidance in the 2008 report.
Instead, the figure for the top-ups - which have already been paid - is "closer to €250m"; equivalent to around £215m and £18m more than expected "following funding valuations for the ICI plans".
The company stated total 2009 cash pension contributions to its DB schemes are now expected to reach €370m, up from the expected €304m, although this includes the UK top-ups.
Although AkzoNobel does not provide a specific breakdown of the assets and liabilities by schemes, it confirmed: "Since the AkzoNobel Dutch and Swedish pension schemes became independent, the majority of the pension assets, liabilities and also the deficit are UK based, mostly to the former ICI fund. We do not provide an exact breakdown."
In February 2009, the firm's €3.6bn Dutch pension fund reported a loss of -20.4% for last year as its equity allocation lost 42% in 2008. (See earlier IPE article: Akzo Nobel scheme loses a fifth)
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