On the go: Glasgow-based media company STV Group has reached an agreement with the trustees of its two defined benefit schemes over its December 2020 funding valuations and recovery plans.
The two DB schemes — the Scottish and Grampian Television Retirement Benefits Scheme and the Caledonian Publishing Pension Scheme — are both closed to new members and only one has a “small number” of active employees, according to the company’s 2020 annual report.
Contributions were suspended in 2020 from the second quarter to December to provide the company with greater flexibility during the pandemic, which saw the combined IAS19 accounting deficit rise to £70.3m at the end of 2020 from £64m at the end of 2019, though it reached a high of £76.9m in June 2020.
“The increase in the deficit year on year is a result of the lower discount rate, driven by the significant fall in corporate bond yields as a result of the Covid-19 economic backdrop,” the annual report stated.
“This impact of the lower discount rate more than outweighed the benefits from contributions paid and the return on scheme assets, the latter being higher than expected due to the hedging strategies of the schemes, which saw the value of liability-driven investments increase over the year.”
Announcing the agreement on Wednesday, the group confirmed that the combined funding deficit, “having allowed for movements in the funding position to June 30 2021”, stood at £116m on a pre-tax basis.
This compares with a shortfall of £127m at the previous settlement date in 2019, it stated.
Deficit recovery plans have been agreed with an end date of October 2030, with aggregate monthly payments unchanged from previous plans.
“The 2021 deficit recovery payments will total £9.3m, with annual payments then increasing at the rate of 2 per cent per annum over the term of the recovery plans, in line with the previous agreement,” the group said.
The agreement likewise retains a contingent cash mechanism, that will see contingent funding payments equivalent to 20 per cent of any outperformance above a benchmark of available cash being paid to the schemes.
The aim is for the two schemes to reach a fully funded position by 2030.
Lindsay Dixon, STV Group’s chief financial officer, said: “Agreement on the pension scheme valuations has been reached in an efficient and timely manner, providing certainty to STV, the schemes’ trustees and to our broader stakeholders, and demonstrating STV’s continued commitment to supporting our former colleagues.”
