The trustees of Centrica’s £5.6bn defined benefit (DB) pension scheme have agreed a reduction in employer contributions as a result of improvements to the scheme’s funding position.
In a stock exchange announcement today (20 February), the company said it had agreed to pay £140m a year into the pension scheme until 2027, following the most recent triennial valuation. This compares to its previous contribution arrangement, which involved annual payments of £170m.
It follows a marked improvement in the pension scheme’s funding position. As of 31 December 2024, it had an estimated deficit of approximately £450m on a technical provisions basis.
This compares to a £700m deficit reported as of 30 June last year, and a £944m deficit that informed the pension scheme’s 2021 triennial valuation.
On an IAS 19 basis – a less conservative reporting method for pension scheme funding levels – the deficit was £21m at the end of 2024, compared with £117m 12 months earlier.
Russell O’Brien, Centrica’s chief financial officer, said: “This agreement gives clarity on the company contributions to the defined benefit pension schemes over the coming years and is testament to the strength of the collaborative relationship we have with the pension scheme trustees.”
During 2024, Centrica’s pension scheme repaid a £400m loan from the company that was made in October 2022, to support the pension scheme’s liquidity position through the gilts market crisis.
In 2022, , with its in-house team – led by chief investment officer Chetan Ghosh – transferring to Schroders.
