UK - ICI and pension fund trustees are in disagreement about the level of funding required to support the longevity risk of its main pension scheme.
Details of the ICI Group's latest financial results, published yesterday, reveal the company's overall pensions deficit for several funds has fallen from £1.3bn at the end of 2006m, under IAS19, to £721m to the end of June 2007 - a 45% drop on its earlier deficit level, but its longevity risk is higher than expected so more assets are needed to cover the increasing age of members.
Trustees of the UK ICI £6.5bn (€9.6bn) pension fund - which accounts for 80% of ICI Group's pensions liabilities - have reviewed longevity assumptions and discovered its members are living longer than initially believed, according to the company's statement of Q2 2007 results.
ICI, the company, has now added an extra £175m to its longevity liabilities calculations following an interim valuation to March 31 2007 to those applied in the 2005 triennial review.
However, this is half the funding increase pension fund trustees have recommended, as the review suggested £350m is need to plug the longevity risk gap - raising the funding deficit to £700m - so both parties and the Scheme actuary have agreed to review the issue for the scheme's 2008 triennial review.
"The Company, based on separate actuarial advice, believes this judgement is too conservative at this time and should form part of the 2008 triennial valuation when a full three years' experience is available," said ICI in its official results.
"The Trustee and the Company have therefore agreed to an additional remediation schedule totalling £175m in NPV terms, with £50m being paid to the Fund in Q1 2008, £50m in Q1 2009 and £100m in Q1 2010.
A reduction in the deficit change is the result of updated actuarial assumptions and discounted rates as well as a total of £377m top-up contributions made to ICI's various pension funds.
Elsewhere, British Airways today announced it has plugged some of its scheme deficit funding gap with a £560m one-off cash payment, the final instalment of a £800m payment deal, signed in January, to cut the deficit on its New Airlines Pension Scheme from £2.1bn (€3.1bn) to almost £1bn.
Unilever also revealed yesterday the net surplus on its pension funds increased by €300m to €1.9bn in the second quarter of this year, thanks to recent gains from equities.
Quarterly figures reveal the Anglo-Dutch household goods giant saw the funding position of its main pension schemes improve since the start of the year as markets produced higher asset valuations and lower liabilities through discounted rates.
The company's net pension fund liabilities now stand at €1.2bn but the surplus on funded schemes has risen to €1.9bn despite a deficit on one funded scheme of £500m.
At the same time, Unilever has also managed to cut its unfunded pension liabilities by €300m to €3.1bn.