UK- Steelmaker Corus has bucked the trend of companies disclosing deficits on their pension funds by announcing an expected surplus of £865m on its £11.3bn (e18.4bn) scheme. The steelmaker says it has no plans to use the surplus, despite debts of £1.6bn. Instead, it will enable the company to ease back on contributions in the near future. Last year it contributed £49m to the scheme compared with £106m in 2000.
Corus’s latest annual report shows that with deferred tax liabilities and non-recoverable money, the total surplus is even larger at £1.7bn. Corus says the scheme has benefited from being underweight in equities. Excess money has also accumulated due to the below average life expectancy of steel workers.
Corus’s announcement comes as many large companies have announced deficits in their funds courtesy of the new accounting standard FRS17. Research published last month by consultants Watson Wyatt suggests half the pension schemes of the largest 100 companies in the UK are likely to report deficits as of the end of 2001 thanks to FRS17.
According to the consultant, the total deficit for those funds reporting at 31st December is roughly £4bn allowing for deferred taxation. Corus is introducing FRS17 next year but it estimates the surplus would have existed at the end of the year even if it had been using the new standard.