Kier DB schemes’ surplus rises to £19.5m

Construction company Kier’s defined benefit pension schemes posted a £19.5m surplus at 30 June, a £11.6m increase year-on-year, its FY2019 results have revealed.

In the previous year, the schemes had a total surplus of £7.9m, which shrunk to a £14m deficit in December 2018.

The rise was primarily driven by a £18.9m increase in assets, up to £58.4m from £39.5m, although this was partially offset by a £7.3m increase in liabilities, to £38.9m.

The firm operates four DB schemes, the largest of which is the Kier Group Pension Scheme.

Its report also revealed that the firm incurred an exceptional GMP equalisation charge of £6.1m, and paid £24.2m in employer contributions, down from £26.6m the previous year.

During the year, Kier launched a member options exercise, offering a pension increase exchange (PIE) to members of the Kier Group Pension Scheme and the Mouchel Business Services Limited Pension Scheme, which is also operated by Kier.

This offered members, who are already drawing a pension, a one-off increase in pension in lieu of future annual increases on part of their pension.

The report stated: “The initiative was carried out with support from the trustees of the pension schemes, in order to provide more flexibility and choice for members, reduce risk, and reduce cost in the group's defined benefit pension schemes.”

In September 2018, XPS Pensions Group acquired the Kier Pensions Unit for £3.5m.
Despite a seemingly positive year for its pension schemes, Kier reported a £245m pre-tax loss for the year, due to costs surrounding the restricting of the business.

Furthermore, it’s operating profit was down by 33 per cent to £124m.

Commenting, Kier chief executive, Andrew Davies, said: "Kier experienced a difficult year, resulting in a disappointing financial performance.

“However, we are building firm foundations for the future: we have a new management team in place, we have defined our strategic priorities and we are taking decisive actions to deliver them.

“We have a strong order book, reflecting the strength of the underlying business, the quality of our people and the group's capabilities.

“The re-shaping of the group is designed to reduce its overall indebtedness during FY2020 and to restore Kier to robust financial health."

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