Thames Water in talks about ‘future’ of DB schemes

Thames Water has confirmed it is in talks with employees and trade unions about the “long-term future” of its defined benefit schemes, it has been reported.

The water supplier, which currently operates two DB schemes and one DC scheme, said the DB schemes are “unsustainable”.

“We are in discussions with employees and trade unions about the long-term future of these defined benefit schemes, which are unsustainable, but no final decisions have been taken,” a spokesperson said. “We have a recovery plan in place to cut our pension deficit to zero by 2027 — we currently pay in an extra £22m every year.”

In its most recent annual report, for 2017/18, it revealed its DB schemes as at 31 March 2016 had a combined deficit of £364.9m (actuarial valuation), compared to £288.3m in 2013. However, under IAS 19, its more recent deficit was £300.8m at 31 March 2018.

As noted by the spokesperson, Thames Water contributes £22m a year to the scheme, as agreed as part of the recovery plan in June 2017.

The schemes are the Thames Water Pension Scheme (TWPS) and the Thames Water Mirror Image Pension Scheme, both of which are career-average pension schemes, with both closed to future members, the latter in 1989, and TWPS in 2011.

Thames Water plans to close both of the DB schemes by March 2020.

In a statement, the company said: “We are committed to providing fair and affordable pensions for all our employees — past, present and future. Our two defined benefit schemes have been closed to new members for some time, with new employees joining our defined contribution scheme.”

Around 4283 (67 per cent of the workforce) are in a DC scheme through which the company pays twice the employee’s contributions up to a maximum of 12 per cent of salary.

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