On the go: A proposed £2.57bn cash acquisition by Cobham Ultra Acquisitions of Ultra Electronics Holdings will see the defence company’s defined benefit scheme receive an extra £100m in funding.
Ultra, a defence and security company serving clients including the UK government and other members of the ‘Five Eyes’ nations, has a DB scheme that was closed to new entrants in 2003 and closed to benefit accrual in 2016, according to its most recent annual report.
An actuarial assessment in 2019 found the scheme had a deficit of £77.2m, a decrease of £37.2m compared with the same figure in 2016, which stood at £114.4m. As of December 2020, that deficit had fallen further, sitting at £56.6m.
Following the 2019 assessment, Ultra reached an agreement with the scheme trustee to continue paying £11m annually, with the goal of eliminating the deficit by March 2025.
In August, as part of the proposed acquisition, Cobham entered into a legally binding memorandum of understanding with the Ultra UK DB scheme trustee, which will see cash contributions to the scheme increased to £100m in aggregate over five years, with an initial £57m sum followed by £47m to be paid over the subsequent four years.
Cobham will also grant the Ultra UK DB scheme £125m of security so it can have an equal treatment to other lenders, with the aim to “secure current and future liabilities of the Ultra Group to the Ultra UK DB Pension Scheme”, according to a market update published on Monday.
No changes will be made to the arrangements for Ultra’s defined contribution pension plans, the statement added.
