Mothercare’s pension scheme deficit dropped to £60m

pension scheme

The firm’s results revealed the pension deficit had dropped to £60m compared to the £124.6m recorded at the last full valuation of the Mothercare UK schemes in March 2020

Mothercare’s pension scheme deficit materially reduced to £60m as at June 2022, according to its full-year results.

The firm’s results – published yesterday – revealed the pension deficit had dropped to £60m compared to the £124.6m recorded at the last full valuation of the Mothercare UK schemes in March 2020.

The results also showed as at 30 June 2022 total assets, based on ‘desktop projections’ sat at £330m, down from £383.7m in March 2020, while total liabilities fell by £118.3m compared to March 2020 from £508.3m to £390m.

The firm’s defined benefit (DB) scheme – which has been closed with effect from 30 March 2013 – had a temporary surplus of £12.4m at the end of the year, compared to £25.6m in 2021.

Mothercare’s results also revealed it has agreed revised terms for its debt financing agreements with GB Europe Management Services and had agreed reduced deficit reduction contributions with the scheme trustees of its DB schemes.

To support the new debt financing arrangements, Mothercare reached an agreement with the trustees for a further reduction in deficit reduction contributions.

The revised recovery plan now sets out aggregate contributions of £29m in the financial years March 2023 to March 2027. This represents a £30m reduction in the aggregate cash payments that were to have been made to the pension schemes in that period under the previous arrangement.

The revised recovery plan agreed with the trustees includes total contributions in the financial years to March 2023 of £1m; March 2024 £4m; March 2025 £7m; March 2026 £8m; March 2027 and beyond £9m, aggregating to fully fund a £78m deficit by March 2033.

Chair Clive Whiley said: The year under review was bookended by the Covid-19 pandemic and the Ukraine conflict, however, despite the persistence of these difficult global challenges, we have begun to demonstrate the potential of Mothercare as an asset light global franchising business.

This represents an inflection point for the business, with the combines benefits of more normalised circumstances and the updated financing arrangements greatly enhancing our financial flexibility, he said.

He said: Accordingly, while mindful of the global inflationary environment and its impact on both consumers and the business we remain positive on the long-term prospects.

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