UK publisher sees pension deficit fall due to discount rate rise

UK - The pensions shortfall at Trinity Mirror’s defined benefit (DB) schemes narrowed during the first half of the year, with the company still waiting for the UK regulator to sign off on plans to cut its deficit payments by two-thirds.

The IAS 19 pension deficit narrowed by £20.2m to £209.9m from £230.1m from January to June 2012, the group said in its interim report.

Net of deferred tax, the shortfall reduced to £159m from £172m.

The company said: “Liabilities have reduced due to an increase of 0.1% in the real discount rate which has been partly offset by a strengthening of the mortality assumptions.”

In the first half of 2012, the trustees removed future exposure to £18.9m of liabilities by buying insurance policies, according to the report.

“At the period end 20.9%, or £353 million, of liabilities are secured by insurance policies,” Trinity Mirror said.

In March, the Pensions Regulator said it would investigate Trinity Mirror after the group said it agreed with trustees of its DB pension schemes to reduce yearly deficit recovery payments to £10m from £33m until 2015.

A spokeswoman for the regulator said: “We can confirm that we are in discussions with the pension trustees, but are unable to comment in detail on specific companies or pension schemes due to restrictions under the Pensions Act 2004.”

The company, runs a number of DB pension schemes for its employees across over 200 regional and national publications, closed to new entrants at the beginning of 2003 and closed to future accruals in March 2010.

Under the agreement with trustees announced in March, Trinity Mirror will re-instate the normal contributions of around £33m annually from 2015.

The company said the pact had helped it get a new £110m bank facility.
The parties agreed that the company has to pay extra contributions if earnings reach a certain level and if it pays dividends.

These additional payments would be half of the amount by which EBIDTA (earnings before interest, taxes, depreciation, and amortisation) exceeds £145m in 2012 and 2013 or £130m in 2014.

If the company pays dividends, contributions would match dividend payments, according to the agreement.

In its H1 2012 interim report, the company said it made deficit funding payments of £5.0m and a payment of £0.9m relating to costs incurred by the schemes in the first half. It said it would make a further £5.0m payment in the second half.