Pension rights to be safeguarded under Dignity acquisition

Bidco has confirmed that existing pension rights are to be safeguarded as part of its proposed acquisition of funeral services provider Dignity, with no changes to be made to the group's defined benefit (DB) pension scheme.

The directors of Dignity and Bidco reached agreement on the terms of a recommended cash offer for Bidco to acquire the entire issued and to be issued share capital of Dignity, other than the Dignity Shares already owned or controlled by Castelnau and PAMP.

Under the agreement, each Dignity Shareholder, other than Castelnau and the PAMP Affiliates, will be entitled to receive 550 pence in cash for each share, valuing the entire issued and to be issued share capital of Dignity at approximately £281m.

In considering this offer, the Dignity directors said that they had given "careful consideration to the assurances given by Bidco regarding the safeguarding of the existing employment rights of Dignity employees and existing pension obligations of Dignity".

The Dignity Group operates an occupational defined benefit (DB) pension scheme, the Dignity Pension and Assurance Scheme, which is funded and governed by a trustee board independent of Dignity's management.

The Dignity DB Scheme is closed to new entrants and is also closed to future accrual in respect of all members, except for a small number of members in the Local Government Pension Scheme (LGPS) sections who continue to accrue benefits.

In addition, the Dignity Group participates in the LGPS in respect of a small number of Dignity Group employees who accrue defined benefits directly in the LGPS.

Members of the Dignity Group are also able to participate in a number of other pension arrangements that are defined contribution (DC) arrangements, including, amongst others, the People's Pension, a DC master trust.

As part of the acquisition, Bidco confirmed that it does not intend to change the level of employer contributions to the Dignity DB Scheme under current arrangements, reopen the Dignity DB Scheme to new members or the future accrual of benefits, or change the current arrangements for the accrual of benefits for existing members of the LGPS sections.

Bidco also confirmed that it has had "preliminary engagement" with the trustees of the Dignity DB Scheme in relation to the acquisition, adding that it "looks forward to further engagement in due course... and to developing a positive and supportive relationship with the trustees in the period prior to and following the acquisition becoming effective".

In light of this, the Dignity directors confirmed that they intend to recommend unanimously that Dignity shareholders accept or procure the acceptance of the cash offer.

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