Transport firm First Group has said it is facilitating pension members' use of pension freedoms in order to improve its deteriorating funding level.

In its final year results published today, 30 May, the company said it is working closely with trustees to “facilitate members' engagement” with their pension freedoms, after its deficit for its two defined benefit pension schemes grew from £273.7m to £307.2m over the last six months.

First Group added that it was also taking measures to derisk the investment strategy of its two UK defined benefit pension schemes.

It said: “In the year, we continue to work with trustees to facilitate members’ engagement with and utilisation of their pensions freedoms, which assists in improving funding levels, and we are working with the various UK schemes to progressively derisk their investment strategies.

“Based on the most recent actuarial valuations as at 5 April 2016 and 5 April 2015 respectively, the combined funding deficit of the First Bus and Group defined benefit schemes in the UK, taking into account funding guarantees provided by First Group, is approximately £250m higher than the balance sheet position on an accounting basis.”

The bus operator said it the increase in deficit was due to lower real discount rates and unfavourable foreign exchange movements.

The group and the bus schemes were both closed to future accrual at the start of the year.

First Group added that is continues to participate in the review of the industry-wide Railway Pensions Scheme, with an estimated deficit of £7.5bn, but that it is not yet possible to “determine the impact to ongoing contribution requirements”.

The group said the cost of guaranteed minimum pensions equalisation was £21.5m.

The group saw its revenue increase by 5.7 per cent over the year, recording an operating profit of £332.9m led by the expansion in First Student and First Bus.

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