Barclays' pension surplus falls to £1.5bn

The Barclays Group's IAS 19 pension surplus across all its schemes fell by £300m during 2020 to £1.5bn, as of 31 December 2020, according to its final results report.

As reported by our sister title, Pensions Age, the UK Retirement Fund (UKRF) meanwhile, which is the group’s main scheme, fell by £300m over the period to an IAS 19 pension surplus of £1.8bn, despite having climbed to £2.8bn in the first half of 2020.

The group attributed the movement in the UKRF scheme to a net decrease in the discount rate and changes to pension increase assumptions, which was partially offset by higher than assumed asset returns.

In addition to this, the latest annual update as at 30 September 2020 showed that the funding deficit for the UKRF had improved to £0.9bn, compared to £2.3bn recorded at the 30 September 2019 triennial valuation.

The group attributed this improvement to a £1bn deficit reduction contribution (DRC) paid over the past year, noting that the deficit recovery plan requires further DRCs of £700m in 2021, £294m in 2022, and £286m in 2023.

The group also confirmed that it paid the £500m DRC agreed for 2020, with the UKRF at the same time subscribing for non-transferrable listed senior fixed rate notes for £750m, backed by UK gilts.

It explained that these senior notes will entitle the UKRF to semi-annual coupon payments for five years, and full repayment in cash in three equal tranches in 2023, 2024, and at final maturity in 2025.

“As a result of the investment in senior notes, the regulatory capital impact of the £500m deficit reduction contribution paid on 12 June 2020 takes effect in 2023, 2024 and 2025 on maturity of the notes,” it stated.

“The £250m additional investment by the UKRF in the senior notes has a positive capital impact in 2020 which is reduced equally in 2023, 2024 and 2025 on the maturity of the notes.”

It also confirmed that the next triennial actuarial valuation of the UKRF is due to be completed in 2023, with an effective date of 30 September 2022.

The group has previously completed a £5bn longevity swap with Reinsurance Group America, which was completed with the aim of enabling the scheme to manage a proportion of its longevity risk, while members’ benefits remain unchanged.

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