United Utilities has revealed that its defined benefit pension surplus rose by £215m in the six months prior to 30 September 2019 to reach £699m.

The firm that the increase was a as a result of a significant fall in gilt yields during the period and the acceleration of £103m of deficit repair contributions to the company's DB schemes.

“These payments represent the final acceleration of deficit repair contributions set out in the schedules of contributions agreed with the schemes' trustees as part of the 31 March 2018 valuation process, and reduce the pension scheme deficit repair contributions due from the company down to nil”, the report stated.

It also received a £106m remeasurement gain on the pension schemes, primarily due to a reduction in the discount rate, resulting in an increase in the defined benefit surplus on an IAS 19 accounting basis due to the technical scheme liabilities, which are subject to hedging under an asset-liability matching strategy, being higher than the IAS 19 liabilities.

United Utilities operates two main DB schemes, the United Utilities Pension Scheme (UUPS) and the United Utilities PLC Group of the Electricity Supply Pension Scheme (ESPS).

In the first six months of 2019, most of the active members of the DB sections of the UUPS transitioned to a hybrid section comprising a capped DB element and a top up defined contribution component.

The hybrid scheme is linked to CPI rather than RPI.

The report also revealed that the firm paid a total of £6.6m on guaranteed minimum pensions equalisation, £5.5m of the UUPS and £1.1m for the ESPS.

United Utilities' schemes have the long-term target of self-sufficiency, and the firm expected there to be “minimal ongoing reliance on the company by the pension schemes”.

During the same period, United Utilities made £10.9m of contributions to its DC schemes, down from £12.4m this time last year.

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