National Grid pension deficit rockets to £1.2bn

The National Grid pension deficit increased by £980m in six months to total £1.2bn, as of 30 September, its half-year results have revealed.

The increase was primarily attributed to changes in actuarial assumptions, which resulted in an increase in liabilities, and increased employer contributions.

Pension liabilities increased by £863m to £2.65bn between March and September, while assets fell by £117m to £1.45bn during the same period.

National Grid said that the increase in liabilities “reflected decreased in corporate bond yields in both the UK and the US”.

Furthermore, the funded obligations of the schemes rose by £2.66bn to £27.3bn and National Grid paid £237m in contributions.

In October 2019, the National Grid UK Pension Scheme concluded a £2.8bn buy-in transaction with Rothesay Life.

The deal covers just over 8,000 members in ‘Section A’ of the scheme.

In total, the scheme is responsible for around £20bn of assets under management. It has around 100,000 members, mostly from the gas transmission and distribution businesses, and is closed to new members.

The buy-in transaction with Rothesay Life involved the purchase of a bulk annuity, funded by £2.8bn of the UK fixed interest securities, and resulted in an actuarial loss of £500m.

“The actuarial loss is recorded within the consolidated statement of other comprehensive income, and a resulting increase to the net pension liability,” the report stated.

Commenting on the report, National Grid chief executive, John Pettigrew, said: "In the first half of this year we have delivered solid financial performance and continued to deliver strong organic growth at the top end of the 5 to 7 per cent range.

“We also made good progress on our strategic priorities, including agreeing a multi-year, forward rate case in Massachusetts Electric, submitting our draft business plans for RIIO-2 in the UK and completed our acquisition of Geronimo.

“In the second half, we are progressing our priorities across the group including addressing the gas supply constraint in downstate New York.”

    Share Story:

Recent Stories

Bulk annuities during coronavirus
Laura Blows speaks to Just business development manager Prash Mehta about the impact of coronavirus on transactions

Investing in infrastructure
Laura Blows speaks to James Dawes about how, and why, pension funds should be looking at infrastructure as an investment opportunity

Re-shaping the future of fiduciary management?
Pensions Age Editor, Laura Blows, speaks to River and Mercantile co-head, Ajeet Manjrekar, about the future of fiduciary management in the UK

Pensions Age Editor, Laura Blows, speaks to Christopher Rossbach, CIO and Portfolio Manager of the J. Stern & Co. World Stars global equity strategy about the investment opportunities for global equities in these unprecedented times.