GKN is to make a £250m lump sum payment to address the deficit of its defined benefit pension scheme in a pledge to reduce its future deficit recovery payments, it has been revealed.

As part of its half yearly results to 30 June 2017, GKN confirmed that it will close its DB pension scheme to future accrual in addition to making a lump sum payment to help reduce liabilities.

The £250m payment is to be made into the UK pension scheme in the second half of the year. With this, the current annual deficit recovery payments of £42m are expected to reduce slightly from 2018, the report stated.

The accounting deficit of GKN's UK retirement schemes decreased over the past six months from £1.22bn to £1.06bn as of 1 July 2017. This was attributed to the fact that life expectancy is not increasing as fast as previously predicted.

Furthermore, in the GKN Aerospace sector, a margin of 9.3 per cent was recorded, a slight decrease from 9.9 per cent the same time last year. This was "primarily impacted by higher UK pension costs", among lower profits from asset write-downs and operational challenges in North America, the report noted.

In the six month period, GKN reported a 15 per cent rise in revenues to £4.9bn and pre-tax profits soared by 207 per cent to £559m on a statutory basis, slightly ahead of forecasts, the company said.

Commenting on the group's results, GKN chief executive Nigel Stein said: " “We made progress in the first half and are on track for the full year. We are performing well against our key markets, demonstrating once again the strength of our businesses, strong market positions and leading technology. We continue to invest for growth and have made significant progress to address our UK pension deficit."

Earlier in the year, Stein discussed the closure of GKN's DB scheme that had been agreed with trustees and said the company had made "significant progress to address our UK pension deficit".

Share Story: