The QinetiQ pension fund, the closed UK defined benefit (DB) scheme of the engineering firm, is to see its funding boosted after proceeds from the sale of a subsidiary were promised the scheme.

The QinetiQ Group said in a statement it had entered a conditional agreement to sell its US services division, to an American bidder, in a $165m (€120m) cash sale.

The group confirmed at least £6m (€7.9m) from the sale would be committed to the fund as a one-off cash contribution.

The £1.2bn fund was closed to future accrual in October last year, leaving it with a £24.8m deficit on an IAS 19 basis.

This figure was less than half that of the deficit seen before the company moved to close the fund, transferring all 8,000-plus active members into a new defined contribution (DC) vehicle.

QinetiQ told investors the move to plug its remaining pensions deficit stemmed from a desire to ensure it took account for its pensions obligations, while maintaining a strong, cash-generative, company.

It said it was committed to “maintaining an efficient balance sheet”.

The sale and cash contribution are part of several attempts the company has made to reduce the scheme’s deficit, and its impact on the balance sheet.

In March 2012, after lengthy legal proceedings with the scheme trustees, the company won the right to shift pensions indexation from the generally higher retail prices index (RPI) to the consumer prices index (CPI).

QinetiQ, a privatised former public organisation, forced through the switch on the back of a wholesale shift from RPI to CPI for public, and former public sector, pension schemes. The move shaved over £100m off the deficit.

In 2012, the scheme also negotiated a recovery plan which included a £40m cash payment and a £13m per year contribution until 2018, including proceeds from a asset-backed contribution structure agreed using the company’s property.