Dairy Crest (DCG) announced this week it had reached an agreement with the trustee board of its pension fund to change the scheme’s built-in increases to follow the consumer prices index, rather than the retail prices index. As a result, it has reduced cash contributions to the scheme by £12m over the next two years. The accounting, or IAS19 deficit – which appears in the financial statements – has improved by £125m, which will be reported as a gain in the results for the year to March 2018.
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The company will now pay £10m in 2017-18 and £15m in 2018-19, followed by £20m annually until March 2022. Management believes these contributions combined with gradual derisking will lead the scheme to be self-funded from then on.
