ICI is doubling its annual pension top-up payments to £122 million to deal with a 40 per cent increase in its pension fund deficit.
The British chemicals group said that a three-yearly valuation of its pension fund had uncovered a £187 million increase in the deficit, which had now reached £657 million.
The shortfall has arisen from changed mortality assumptions. ICI has a £1.5 billion pension liability spread across 59,000 pensioners, 1,200 active employees and 14,000 deferred pensioners. The company was already committed to paying £62 million a year over a nine-year period to help to plug the deficit, but said yesterday that it would boost the top-up to £122 million a year until 2009 before reverting to the original payment schedule.
John McAdam, the chief executive, denied that the increased pension top-up payments would endanger the success of ICI’s crucial four-year recovery programme, which includes a mandate to achieve sustainable positive cashflow. The recovery programme is on track to achieve its targets by 2007, in the process transforming what was a moribund organisation into a more streamlined and efficient chemicals specialist.
Dr McAdam said the pension top-up was not dependent on the sale of its Uniqema unit. ICI also reported a 5 per cent rise in adjusted full-year pre-tax profits to £444 million.