Food manufacturer to link pension payments to profitability

by Tony Bonsignore - 27/04/2010

"Food manufacturer Uniq has agreed an innovative deal with its pension fund trustees to link future payments to the company’s final salary pension scheme to profitability. "

Under the agreement, which is due to be introduced in 2013 but is still to be cleared by the Pensions Regulator, the annual employer contribution to the Uniq scheme will be either £10 million or 33% of earnings before interest, taxes, depreciation and amortization (EBITDA) – whichever is higher.

It is believed to be the first time such an arrangement has been proposed by a UK company, and may provide a template for other firms with significant pension fund deficits.

Uniq was formerly Unigate, before selling off its dairy operations in 2000. Beneficiaries of the pension scheme include many retired milkmen, and the funding deficit is more than 17 times larger than the company’s market capitalisation.

‘If cleared, this will facilitate our strategy to build a UK focused convenience food business with the quality and scale to generate sustainable growth,’ said Geoff Eaton, chief executive of Uniq. ‘The outcome of the regulatory process is likely to have a fundamental impact on the future of the pension scheme and shareholder value.’

More Details: http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=394361