UK – Aerospace group Rolls-Royce is proposing to make a £500m (€724m) lump sum contribution to help ease a £1.3bn pension deficit.

“The group has proposed to make a lump sum contribution of £500m across the three schemes and to increase the level of future group contributions,” it said.

The payments would depend on scheme members accepting the closure of the final salary pension schemes to new members and a change of investment strategy “to achieve progressively a better match between assets and liabilities”.

The would entail a move to bonds from the current 70% equity allocation, spokesman Peter Barnes-Wallis was quoted as saying in a Bloomberg News interview.

The news came as consulting firm Watson Wyatt revealed that pension contributions by companies in the benchmark FTSE 100 index have risen by 30%.

Rolls-Royce said it has started consultations with representatives of its three UK pension funds. The talks follow an agreement reached in 2003 to cut the deficit of the main Rolls-Royce Pension Fund by £567m.

The three funds - the Rolls-Royce Pension Fund, the Rolls- Royce Group Pension Scheme, and the Vickers Group Pension Scheme - have a total membership of 119,054. The firm closed its main fund to new members in 1999.

Rolls is the latest big firm to tackle its pension deficit, following the likes of BAE Systems and British Airways.

''Company and trustee boards across the country have been engaged in finding suitable solutions to address their pension deficits,'' said Watson senior partner Chinu Patel.

''Paying additional contributions was one option and, it seems, affordable since pre-tax profits for the group of FTSE100 companies reporting at the end of last year were 40 per cent higher than the previous year."