Ireland’s An Post has entered into a €100m contingent asset deal as part of a new funding proposal for its defined benefit scheme, one of the country’s largest.

The An Post Superannuation Scheme saw its deficit decline by €56m over the course of 2013, standing at €229m at the end of the year due to continued good investment returns, as well as changes implemented as part of its funding proposal, according to the company’s annual report.

The report praised the changes, which will see scheme retirement age increase in line with the Irish state pension age and impose a 2% cap on pensionable pay and benefits, as an “innovative proposal”.

“As part of the solution, a mortgage and charge relating to certain property assets of the company with a maximum value of €100m by 2023 will be put in place in favour of the An Post Pension Schemes for use as a contingent asset of the schemes,” the annual report said.

According to details of the initial proposal, released last year, the contingent assets will be used to meet the incoming 10% risk-reserve requirements, coming into force in 2016.

The agreement is not the first use of contingent assets to shore up underfunded defined benefit schemes in Ireland, with Greencore entering an €11m property and mortgage-backed deal with its fund last year.

More significantly, Allied Irish Banks put in place a €594m contribution deed backed by loans to ensure that active and deferred members did not suffer due to a redundancy programme encouraging workers to take early retirement.

An Post’s annual report also revealed that the firm’s DB scheme had further lowered its discount rate in 2013, down 0.25 percentage points over the 4% in place in 2012 and significantly down from the 5.25% applied to the valuation of liabilities in 2011.

The scheme in late February finalised a €400m deal that would see it, An Post and the Ontario Teachers’ Pension Plan acquire the licence to run the Irish National Lottery for 20 years.