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(Alliance News) - WH Smith PLC on Monday said it has bought a bulk annuity insurance policy to remove liability for its defined-benefit pensions.
WH Smiths is a books and stationary retailer that operates on UK high streets as well as in travel locations such as airports and train stations globally.
The trustee of the WH Smith Pension Trust took out the policy from Standard Life, which is part of London-based insurance services provider Phoenix Group Holdings PLC.
WH Smith said that the policy will cover all 12,950 defined-benefit pension members and will be purchased using existing assets held within the trust, without the need for the company to make any additional contributions.
As a result of this "comprehensive risk-removal", WH Smith will not be required to make any future contributions into the trust regarding defined-benefit liabilities.
It added that there will be an immediate small benefit to its cashflow and a small reduction in its liabilities.
WH Smith said: "The purchase of this insurance policy follows a long period during which the trustee, with the support of WH Smith, has reduced investment, interest rate and inflation risks in the trust, and the funding level has improved.
"The bulk annuity policy matches the trust's cash flow benefit obligations to its members, removing longevity and other demographic risks as well as investment, interest rate and inflation risks," it added.
WH Smith shares were down 0.8% to 1,441.53 pence each in London on Monday morning.
By Sophie Rose; sophierose@alliancenews.com
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