Whitbread has reached an agreement with the trustee of its DB scheme to make a one-off contribution of up to £380m to the Whitbread Group Pension Fund, following the sale of Costa to The Coca-Cola Company.
The sale was completed today (3 January) and will release Costa, which is owned by Whitbread, from its obligations to the pension fund.
The one-off contribution “will significantly de-risk the pension funds investment strategy” and replace the previously agreed recovery plan, which would have required Whitbread to make total payments of £326m to the pension fund over the next four years.
The announcement, published today, also said: “As previously announced on 21 December 2018, Whitbread intends to start a share buyback programme, which is likely to commence following release of Whitbread's third quarter trading update on 17 January 2019.”
In August, it was announced that Whitbread would be making a contribution to its pension fund as part of the £3.9bn sale, although at the time the amount was unspecified.
In April, Pensions Age reported that Whitbread’s DB pension deficit dropped by £136m on and IAS19 accounting basis, as the group revealed plans to split the Costa and Premier Inn businesses.
As a result of the triennial review, undertaken at 31 March 2017, Whitbread agreed with the trustees to pay £85m each year from 2019 to 2022, with a final contribution of £57m in 2023, although this will now be replaced by a one-off contribution.