Renold PLC Re Pensions (1269I)
December 07 2015 - 2:00AM
UK Regulatory
TIDMRNO
RNS Number : 1269I
Renold PLC
07 December 2015
Renold plc
("Renold" or "the Company" or "the Group")
Re: Lowering risk and reducing liabilities for pension
schemes
Renold, a leading international supplier of industrial chains
and related power transmission products, announces further actions
to reduce and de-risk pension liabilities in the UK and
Germany.
UK: Second medically underwritten insured buy-in
The Renold Pension Scheme (the Group's UK legacy Defined Benefit
pension scheme, 'the RPS') has completed a second medically
underwritten insured buy-in that fully de-risks another GBP27m
(approximately 25%) of the current UK pensioner liabilities (1) and
follows a similar transaction in April 2015. Both transactions were
in respect of the highest risk pensioner members (2) and the
transaction announced today results in approximately 50% of current
UK pensioner liabilities being fully de-risked.
Similarly attractive pricing terms were obtained compared to the
April transaction and hence the RPS was again able to secure the
liabilities at a small discount to their assumed funding valuation.
As a result, the transaction has improved the funding level of the
RPS in addition to the further reduction in risk. The transaction
is broadly neutral from an accounting valuation perspective and was
structured as a 'buy-in' and hence the insurance policy remains an
asset of the scheme. Consideration for the buy-in will be sourced
entirely from a portion of the scheme's holding of high quality
corporate bonds. The Group has agreed that a modest acceleration of
up to GBP1.0m of contingent cash contributions that would have been
payable in the financial year ending March 2018, will be made in
the financial year ending March 2017.
The Group is now fully protected against risks arising from
volatility in longevity, inflation and interest rates in respect of
these members. These factors will be relevant to future triennial
revaluations and funding discussions with Trustees.
Closure of unfunded German pension scheme to future accrual
A German court has confirmed that the pension scheme of the
Group's subsidiary in Germany was properly closed to future accrual
with effect from 30 September 2013. This is expected to result in a
reduction in the Group's unfunded pension obligations of
approximately 6.0% or GBP1.5m, based on market conditions and
exchange rates as at 30 September 2015 and will be fully disclosed
in the Group's Annual Report and Accounts for the year ending 31
March 2016. The confirmed closure also reduces annual service costs
as well as eliminating the German scheme's exposure to the risk of
salary inflation.
Robert Purcell, Chief Executive of Renold, commented:
"These actions significantly reduce and further de-risk our
pension liabilities in the UK and Germany. At the same time, they
lower future funding costs and thus protect the Group's ability to
invest further in the business. They are also important milestones
in rebuilding the Group's balance sheet and delivering sustainable
gains in shareholder value."
7 December 2015
(1) Liabilities assessed on a scheme funding basis
(2) High liability members from a scheme perspective are those
with higher annual pension incomes who represent a significant
concentration of longevity risk for the scheme.
ENQUIRIES:
Renold plc 0161 498 4500
Robert Purcell, Chief
Executive
Brian Tenner, Finance
Director
Instinctif 020 7457 2020
Mark Garraway
Helen Tarbet
NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial
chains and also manufactures a range of torque transmission
products which are sold throughout the world to a broad range of
original equipment manufacturers and distributors. The Company has
a well deserved reputation for quality that is recognised
worldwide. Its products are used in a wide variety of industries
including manufacturing, transportation, energy, steel and
mining.
Further information about Renold can be found on the website at:
www.renold.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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