Bernardo's to close DB pension fund to new accruals
The defined benefit (DB) pension scheme of UK children’s charity Barnardo’s has slid deeper into deficit in the last financial year, and the organisation has now closed the scheme to further DB accruals.
In its 2013 annual report, Barnardo’s revealed that, in the year to the end of March, the Barnardo Staff Pension Scheme — which operates on a DB basis — had a funding shortfall of £87.8m (€104.2m), up from £83.9m the previous year.
The report said: “This increase in the deficit reflects a continued deterioration in pension scheme funding across the UK.”
The board of trustees of Barnardo’s and the trustees of the pension fund had agreed a plan to eliminate the deficit over time, it said, adding that this included the closure of the pension scheme to future accrual.
The total fair value of assets in the DB scheme rose to £525.2m at the end of the 2013 accounting year from £463.9m the year before, but the present value of liabilities outpaced this increase, expanding to £613.0m from £547.8m.
The DB scheme has been closed to new entrants since 2007, and pensions accrued since then have been on a career average revalued earnings basis, Barnardo’s said.
Active members of the DB scheme have now become members of the defined contribution (DC) Barnardo’s Retirement Savings Plan for future service.
The charity said benefits for members of the DB scheme would continue to increase broadly in line with inflation.
Payments to the DB scheme that had been agreed within the recovery plan were budgeted and included in future cashflow projections, it said.
Those payments will be made over a number of years, it said, adding that they did not require a reduction in the total funds shown in the balance sheet.