Dixons Carphone has estimated that the recent court ruling on guaranteed minimum pension equalisation will increase its liabilities by £18m, according to the company’s interim report.

Its report stated: “There are a number of uncertainties surrounding the change, including the method of calculation of the equalisation and any potential appeals against the ruling, therefore we consider that the amount is subject to further change, however this currently represents our best estimate.”

The report highlighted that the Lloyds Banking Group court case was a factor in its DB liabilities' overall increase of £73m over six months, to £1.66bn, as of 27 October 2018.

Its scheme assets also increased over the same period, by £29m to £1.14bn and the company’s DB scheme deficit rose by £44m to £514m.

In June 2018, the Work and Pensions Committee sought assurances from the Dixons Retirement and Employee Security Scheme over its recovery plan, after it was revealed the firm’s pre-tax profit fell by £119m in a year.

The company met the planned £46m worth of pension’s contributions for H1 2018/19, which reflected “the timing of contributions following the 2016 triennial valuation”.

It also plans to reduce the recovery period to less than the current 12 years by “increasing pensions fund contributions next year, following the next triennial valuation, in agreement with trustees”.

The report continued: “We will revert to the previous policy of 3 times cover for dividend, which will lead to a reduction of approximately 40 per cent in the dividend this year.

“This is intended to allow the dividend and the pension fund contributions to be at least covered by free cash flow, which we consider to be prudent.”

Dixons and Carphone operates a number of defined contribution and defined benefit pension schemes.

The principal scheme operates in the UK and includes a funded defined benefit section, the assets of which are held in a separate trustee administered fund.

The defined benefit section of the scheme was closed to future accrual on 30 April 2010.

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