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Rolls-Royce secure pensions top-up deal

UK - Rolls-Royce Group has completed its payment of £500m (€694.4m) into its three defined benefit pension plans after trustees agreed to a lower risk investment strategy.

The company had previously announced plans to reduce the pension deficit of its three schemes, the Rolls-Royce Pension Fund (RRPF), the Rolls-Royce Group Pension Fund (RRGPF) and the Vickers Group Pension Fund (VGPF), on condition the schemes close to new members and change to a less volatile funding strategy.

In May, following the closure of the RRGPF and VGPF to new members from 1 April 2007, Rolls-Royce said it would make an initial payment of £140m into the schemes through changes in the commutation of benefit and an increase to pensions in payment.

But it warned the final £360m would only be paid once "final risk reduction strategies are agreed with trustees" as only its second-largest scheme, the RRGPF, had at that point implemented a "substantial switch into assets that are better correlated with the liabilities".

The company today confirmed it had paid the outstanding contribution as the "implementation of the revised lower risk investment strategies is largely complete across all three schemes".

It said: "These changes will significantly reduce the volatility in the future funding level of the schemes, while providing greater confidence in returning the schemes to full solvency over an agreed timeframe."

Rolls-Royce also revealed after 10 years in the role Lord Moore of Lower March would be retiring as chairman of trustees for the RRPF at the end of the year, to be replaced by Paul Spencer, the former treasurer of the group between 1980 and 1986, and also UK chief Executive of Royal and Sun Alliance.

Lord Moore said: " It has been a challenging time for all involved in occupational pensions, but I do feel that at Rolls-Royce we have seen a willingness from all parties to engage in discussions with a determination to overcome the challenges we have faced."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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