Nationwide DB pension surplus falls by £122m

Nationwide Building Society’s defined benefit (DB) pension surplus declined by £122m year-on-year to £172m, as of 4 April 2021.

The bank has funding obligations to several DB schemes, the largest of which is the Nationwide Pension Fund, which closed to future accrual on 31 March 2021.

In 2020/21, Nationwide’s DB pension assets increased from £6,530m to £7,033m, although this was more than offset by liabilities rising from £6,228m to £6,853m.

Its pension benefit obligations also include £8m in respect of unfunded legacy DB arrangements.

Nationwide and the Nationwide Pension Fund trustee entered into a contingent asset agreement in November 2020 whereby Nationwide would provide £1.7bn of collateral in the form of self-issued Silverstone notes.

The scheme would have access to these notes in the case of certain events, such as insolvency of Nationwide.

During the year, Nationwide and the scheme’s trustee agreed to a deficit recovery plan following the finalisation of the Nationwide Pension Fund's 31 March 2019 actuarial valuation.

However, as a result of entering into the contingent asset arrangement, no employer deficit contributions were required in the year ended 4 April 2021.

Additionally, the annual report stated that no employer deficit contributions will be required in the year ending 4 April 2022 or in future years under the terms of the deficit recovery plan.

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