Rentokil Initial Regulatory News (RTO)

19 Dec 2005 10:25

Rentokil Initial PLC19 December 2005 19 December 2005 RENTOKIL INITIAL plc ADDRESSES PENSION SCHEME DEFICIT In its third quarter update on 3 November 2005, Rentokil Initial plc ("theCompany") announced that it was in discussions with the Trustees of the DefinedBenefit (DB) Sections of the Rentokil Initial Pension Scheme ("the Scheme")regarding measures to address the Scheme's funding deficit and to ensureappropriate future funding levels. These discussions have resulted in thecompany proposing a series of positive steps which will deal with these issuesand protect the security of the Scheme's benefits for its members. The deficit of the UK Scheme under IAS 19 as at 30 November 2005 was estimatedto be £325 million. In response to a general trend of increasing longevity,which has adversely impacted the Scheme, the Company and Trustees have agreed toa more prudent basis for estimating longevity that will increase this deficit byan additional £24 million. An agreement has been reached between the Companyand the Trustees to make an immediate payment of £200 million, with theremaining deficit being met by a series of payments ending no later than January2012. The changed regulatory environment for pensions requires the Company todeal with these issues in a shorter timescale than it might otherwise have done.The total funding required to address the deficit will be in the range of £370million to £380 million depending on the final timing of the payments. In order to reduce the likelihood that the scheme deficit will increasematerially in the future, following discussions with the Company, the Trusteeswill be reviewing the Scheme's investment strategy, with the aim of reducingpotential volatility that might be caused by market movements. This will resultin a lower exposure to equities over time and improve the security of Schemebenefits. With immediate effect, the Company will be entering into a period ofcomprehensive consultation with active members of the DB Sections of the Scheme.The Company is proposing to close the DB Sections for the future accrual ofbenefits for active members. The aim of this is to reduce exposure to futureshortfalls and to ensure that the Scheme will be in a position to continue topay all benefits that have been earned to date by its members. It will alsoprovide the Company with more predictable costs of future pension provision.The proposed closure will have no impact on the scheme's deferred pensioners andpensions in payment. If the Company's proposals are implemented, existing active members of theScheme's DB Sections will be offered membership in a defined contributionarrangement so that they can continue to make provision for retirement. Final decisions regarding the review will be taken once the consultation periodwith active members has been completed later in 2006. Shareholder/analyst enquiriesAndrew Macfarlane, CFO Tel: 01342 833022Lisa Williams, Investor Relations Tel: 01342 833022 Media enquiriesCharles Grimaldi, Corporate Affairs Director Tel: 01342 833022Gill Ackers/Kate Miller, Brunswick Group LLP Tel: 020 7404 5959 Notes to editors: The Defined Benefit Sections of the Rentokil Initial Pension Scheme currentlyhas 3,000 active members, 15,000 deferred pensioners and 8,000 pensions inpayment. At 30 November 2005, the scheme had assets of £640 million and liabilities of£965 million. In the Lane Clark Peacock Accounting for Pensions Annual Survey 2005, RentokilInitial had the 96th lowest level of pension scheme funding out of the FTSE-100. This information is provided by RNS The company news service from the London Stock Exchange