Balfour Beatty and the trustees of the Balfour Beatty Pension Fund (BBPF) have re-affirmed their commitment to reach self-sufficiency by 2025, with Balfour Beatty set to pay deficit contributions to the BBPF of £24m in 2023, £24m in 2024 and £6m in 2025.

The contributions were agreed as part of the 31 March 2022 valuation, with Balfour Beatty also confirming that it expects to take further steps over the coming months to reduce the investment risk in the scheme.

As part of this, Balfour Beatty agreed that additional amounts will become payable at £2m per month from March 2025 if the BBPF's performance is materially different from that expected.

As a result of an acceleration mechanism agreed previously between the group and the trustees, the company also made deficit contributions to the BBPF of £35 million in 2022.

The next formal triennial funding valuation is due with effect from 31 March 2025.

In addition to this, Balfour Beatty confirmed that the triennial valuation of the Railways Pension Scheme (RPS) is currently in progress and is expected to be finalised in the first half of 2024.

Following on from the formal triennial funding valuation of the RPS as at 31 December 2019, the group also agreed to continue to make deficit contributions of £6m per annum to help reduce the funding deficit to zero by 2025.

The group's balance sheet showed that net retirement benefit assets were broadly unchanged at £223m in 2022, compared with £231m in 2021, with the surpluses on the BBPF (£225m) and RPS (£37m) partially offset by liabilities in relation to other schemes (£39m).

The BBPF also includes a defined contribution (DC) section, which included 15,382 members at 31 December 2022, with £52m of contributions paid and charged in the income statement in respect of this section.

The total pension cost recognised in the income statement in respect of employee service for defined benefit and DC schemes was therefore £63m, up from £60m in 2021.

The update on the scheme also follows a recent £1.7bn longevity swap that aimed to hedge the liabilities of the majority of its pensioner population against unexpected increases in life expectancy.

The swap will form part of the BBPF's investment portfolio and provide income in the event that pensions are paid out for longer than expected.

Share Story: