UK – Stagecoach Group has reduced its pensions deficit by nearly a third to £115.8m, the company said on Wednesday.

Stagecoach, a UK-listed transport company, in its annual report for the 12 months 30 April that the still-open defined benefit scheme deficit had improved by £50.5m after adding in deferred tax (£40.4m gross), as at that date. Under the FRS17 accounting standard, the net liability of £115.8m, after taking account of deferred tax.

Stagecoach's spokesman said the improvement was down to improved equity returns and additional employer and employee contributions. Employee payments went from 5.5% to 6.5% last October, after a 1 percentage point increase in October 2001. Employer contributions have increased to 10.25% from 8% since October 2001. The has also sacked Putnam as one of its fund managers for poor performance earlier in the year and moved 8% into hedge funds in January, although no further asset allocation changes are planned.

Stagecoach also has a defined benefit scheme for its rail franchise, which is £14.2m in deficit after deferred tax. Total pension cost for the 12-month period was £32.9m, compared to £31.2m for the previous year’s results. Turnover was £1,371m in the last year, compared to £1,305.3m in its 2003 results.