Network Rail's DB pension deficit widens to £5.1bn

Network Rail’s defined benefit (DB) pension schemes saw their deficit widen from £3.45bn to £5.10bn between 31 March 2020 and 30 September, according to the company’s interim results.

The increase in deficit was driven by rising liabilities, with the total value of the schemes’ DB obligation climbing from £10.40bn to £12.85bn during the period, offsetting the impact of the fair value of scheme assets increasing from £6.95bn to £7.74bn across the same time period.

The transport operator attributed the rise in liabilities to changes in inflation and discount rate assumptions from 31 March 2020, with the former having climbed as the Retail Price Index assumption increased from 2.5 per cent to 2.8 per cent and the Consumer Price Index assumption rose from 1.8 per cent to 2.1 per cent.

Meanwhile, the discount rate decreased to 1.6 per cent from 2.2 per cent at 31 March 2020, in line with corporate bond prices and yields.

Network Rail’s 60 per cent share of the deficit amounted to £3.06bn at 30 September.

The increase in deficit contrasts with the news included in the company’s full year results, which showed a reduction in deficit from £5.46bn to £3.45bn between September 2019 and March 2020, with this having been driven by a £2.48bn reduction in liabilities.

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