National Australia Bank (NAB) announced last week it will transfer £130m into its Glasgow-based Clydesdale Bank pension scheme in order to reduce its deficit.
The move comes only two weeks after Clydesdale Bank, which also owns Yorkshire Bank, was allocated £400m of extra capital by its parent company. This earlier cash injection was designed to protect the bank against the effects of the current economic turmoil.
Clydesdale closed its pension scheme to new members in 2005 and moved from a defined benefit (DB) arrangement to a career average (CARE) scheme.
Clydesdale said the actions are being taken to make the non-contributory pension scheme more sustainable for both members and the company.
A joint statement by Clydesdale and NAB said that after a 60-day consultation period for members of both the Clydesdale scheme, as well as Yorkshire bank scheme, the decision was taken that Clydesdale would become "the sole participating employer within the scheme."
The parties said that all other NAB Group companies will therefore cease to be participating employers in the scheme and Clydesdale will accept the sole responsibility for meeting the obligations built up by the other employers' schemes.
The statement said: "NAB will separately make a special contribution of £130 million to the scheme which will be expensed in the income statement of NAB. This special contribution will reduce the pension deficit liability of [Clydesdale] and the benefit will be reflected in [Clydesdale's] financial statements. As a result, there will be only a minor impact on the consolidated NAB Group financial statements arising from the special contribution."
Recent figures published show that the scheme had a £180m funding deficit in October.
Last year this figure stood at £312m. Of this, the Yorkshire Bank employee pension scheme was responsible for £79m.
The joint UK DB Yorkshire and Clydesdale scheme covers over 11,000 members according to figures held by Pension Funds Online.
azeevalkink@wilmington.co.uk
First published 02.02.12
