On the go: Transport operator FirstGroup does not expect to make any further contributions towards its defined benefit pension schemes, after asset sales helped push the schemes into net surplus.
The group could be in line for a £117mn return from its schemes over the course of future triennial valuations.
In May 2021, FirstGroup shareholders approved the sale of the First Student and First Transit subsidiaries, with profits from the £3.3bn deal going towards plugging the group’s pensions black hole.
The group announced in its full-year results that its £296mn net pension deficit for its UK and North American DB schemes had swung into a net surplus of £186.7mn at the close of the year.
“The movement is principally due to cash contributed to the schemes following the sale of the North American divisions, and movements in the impacts of actuarial assumptions driven by the financial markets,” it said.
“The disposal of the FirstGroup America pension plan as part of the First Student and First Transit transaction has also contributed to the net surplus.”
The group said that it had agreed strategies for reaching self-sufficiency with each trustee, and expects the schemes to reach their funding targets without any more contributions. It made deficit-reduction payments of around £30mn in its 2021 full year.
FirstGroup invested £117mn of assets following the sale of its North American businesses, of which £95mn was linked to the Bus scheme and £22mn related to the Group scheme. It does not expect all of these funds will need to be paid into the schemes after triennial valuations in April 2024 and 2030 respectively.
If FirstGroup’s forecasts hold, it expects that £117mn, which was paid into escrow per an agreement with the First Bus and Group pension trustees, could be released from its schemes.
The group also received £11.8mn of excess funding from the Aberdeen Local Government Pension Scheme after its balance sheet date.
“This had been made possible by the transfer of assets and liabilities held within the Strathclyde Pension Fund into the North East Scotland Pension Fund and a subsequent annuity purchase,” it said.
The schemes linked to its former Greyhound business, meanwhile, have experienced a dramatic fall in their pension deficits. Having paid $16.5mn (£13.6mn) into derisking these schemes, the accounting deficit has shrunk from £104.7mn to £10.9mn.
