UK - Resolution Asset Management have been given the go-ahead for the merger with Friends Provident from its own pension fund trustees.

Under the current deal, "it is not expected that the merger will result in any material adverse impact upon the covenant provided by the group".

However, the trustee board noted it "will review the covenant of the group from time to time," Resolution said in a statement.

Employer contributions for the scheme are at the sole determination of the scheme actuary at present.

Resolution's £1bn (€1.4bn) defined benefit scheme was £79.7m in surplus at the end of last year, down £8.7m from the year before. This decline in surplus funding was caused mainly by changes in longevity assumptions which cost the group £48.6m.

This defined benefit scheme is closed to new entrant so new employees Resolution have access to a defined contribution money purchase scheme which is currently valued at just over £1bn.

Trustees of the Friends Provident £825m defined benefit scheme have not yet commented on the merger.

"Friends Provident" is at a different stage in the process of discussions with trustees," a spokesman told IPE. "We expect the process to be completed in due course."

The Friends pension plan was closed to new entrants in July with a small surplus of £7m compared to a £31m deficit year-end 2006 and a defined contribution scheme was set up for new entrants.

Friends Provident also noted in its interim results for 2007 the deficit in respect of the defined benefit pension schemes of its subsidiary F&C has reduced to £25m from £46m at the end of 2006.

The two life insurance companies had combined funds under management of £165bn at year-end 2006.