Melrose to pay £270m into GKN pensions following Powder Metallurgy sale

Melrose will contribute £270m to the £1.24bn GKN pension schemes upon the sale of its Powder Metallurgy business, it has confirmed.

Additionally, the group said that it would contribute 10 per cent of any proceeds from disposals of any GKN businesses and 5 per cent from the disposal of non-GKN business to fund the pension plans.

Upon its £8.1bn acquisition of GKN in April, the group outlined its plans to contribute an initial £150m to the GKN UK pension plans, which has 32,000 members, and annual ongoing contributions of £60m.

Furthermore, the group said it has appointed an independent chairman to the GKN schemes.

Melrose chairman Christopher Miller, said: “Throughout our ownership, we remain good and responsible stewards working for the benefit of all stakeholders, as shown most recently in the deal struck with the GKN pension scheme trustees in committing cash to better secure the future for their members, as we bring them back to properly funded schemes.”

“We have also appointed the first independent chairman to the GKN UK pension schemes and have begun implementing our agreed funding plan so as to seek to safeguard the interests of pensioners and other members.”

Melrose said that of its £1.23bn group pension deficit, £1.24bn related to the acquisition of GKN as at 30 June 2018.

It added that the funding commitments will cease when the funding target, being gilts plus 25 basis points for the GKN UK 2016 plan and gilts plus 75 basis points for the GKN UK 2012 plan, is achieved.

The deficit for the two schemes totalled £458m, with combined assets of £2.63bn and liabilities of £3.09bn, on an IAS 19 accounting basis.

Defined benefit contributions rose to £21m in 2018, compared to £2m last year. The group also announced a 11 per cent increase in dividends over the year.

Last week, Sky News reported that Melrose was exploring de-risking options with a number of insurers for its £500m GKN pension scheme.

    Share Story:

Recent Stories


The modern age
Deputy editor Natalie Tuck chats to the ABI’s Yvonne Braun about her work at the ABI and her thoughts on key pension topics

Stepping into the spotlight
Laura Blows speaks to Laird R. Landmann, group managing director and co-director of fixed income at US-based TCW, about the opportunities TCW can provide for UK pension funds