Cable & Wireless has taken advice from Lane Clark & Peacock LLP (LCP) on the impact that its demerger, which completes today (26 March 2010), will have on its £2bn pension scheme liabilities.

The demerger will see two separate listed companies emerge, Cable & Wireless Worldwide plc and Cable & Wireless Communications plc, which will have separate pension schemes.

A pensions settlement, involving additional cash injections totalling £30million and the provision of a contingent funding agreement for the benefit of each company's main scheme, has been agreed with the scheme trustees.

LCP advised on the settlement, including supporting the company in its discussions with the trustees and advisers, and setting up the new Cable & Wireless Worldwide scheme.

Around half of the existing scheme's assets and liabilities will transfer into this new scheme, with the Pensions Regulator (TPR) providing clearance for the pensions aspects of the transaction.

"This is a large and complex project that involved working collaboratively with a large number of stakeholders," commented Jonathan Camfield, partner at LCP. "One of the innovative features of the pensions demerger agreement is the use of contingent funding agreements in order to provide appropriate security for the pension scheme members whilst keeping cash contribution requirements within reasonable bounds."

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