Electricity power generator, Drax Group, has reported a defined benefit pension surplus of £19m, at 31 December 2018 on an actuarial basis.

Publishing its final results today, 26 February, the group said its defined benefit scheme for its Power Generation business, which operates within the Electricity Supply Pension Scheme framework, previously had a deficit of £1m in December 2017. The scheme closed to new members in 2002.

It said this is largely driven by an increase in the discount rate assumption to 3 per cent (31 December 2017: 2.6 per cent) following lower inflation expectations, which has decreased the value of the scheme liabilities by £23m.

Furthermore, it said that the terms of the trust deed for the DB scheme allow the group to recover any surplus once the liabilities of the scheme have been settled.

“We have therefore recognised the funding surplus at 31 December 2018 in non-current assets within the consolidated balance sheet,” Drax Group stated.

In addition, upon completion of the acquisition of the portfolio of assets from ScottishPower, certain employees with DB pension rights were transferred to Drax. The employees continue to participate in the ScottishPower pension scheme whilst Drax is in the process of setting up a new scheme for the members to transfer to, which will include assets and liabilities for past service benefits.

“Drax's share of the ScottishPower pension scheme assets and liabilities for these employees has been calculated for inclusion in the consolidated balance sheet, and results in a pension scheme surplus of £4m. The group is entitled to receive any surplus on the new scheme once the liabilities have been met under the terms of the draft trust deed,” it stated.

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