Balfour Beatty pension surplus falls by £162m

The funding surplus of Balfour Beatty’s pension schemes has fallen by £162m year-on-year to £22m, as of 28 June 2019, its half-year report has revealed.

The decline was driven by a decrease in the schemes’ total assets, from £283m to £153m, and an increase in their liabilities, from £99m to £131m during the same period.

Balfour Beatty operates several schemes, the largest of which are the Balfour Beatty Pension Fund and the Railways Pension Scheme.

The Balfour Beatty Pension fund posted a surplus of £153m, down from £283m, while the Railways Pension Scheme’s deficit increased from £46m to £83m.

Its other schemes’ deficits fell slightly, from £53m to £48m, while the firm made deficit contributions of £16m, up from £14m in June 2018.

The latest triennial valuation of the Balfour Beatty Pension Fund is due with effect from 31 March 2019 and the company is “in the early stage of discussions with the trustee”.

Under the agreement of the previous valuation in March 2016, the company and the trustee expect the scheme reach self-sufficiency during 2027, which would require Balfour Beatty to make deficit contributions totalling £116m between 2019 and 2023.

The firm plan to reduce the Railways Pension Scheme’s deficit to zero by 2027 with deficit contributions of £6m per year. Its next triennial valuation is on 31 December 2019.

Commenting in the report, Balfour Beatty group chief executive, Leo Quinn, said: "This is another strong set of results - increasing profits backed by a strong cash performance, plus carefully managed growth in our order book.

"Today, the group's geographic and operational diversity underpins our risk management, with over 50 per cent of our business and Investments portfolio assets outside the UK.

"Combined with the strength of our balance sheet and cash flows, this positions Balfour Beatty to create and return future value to shareholders."

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