Vodafone pensions

Funding update

Funding Update as at 31 March 2018

The Vodafone Group Pension Scheme (the Scheme) consists of two Sections: Vodafone Section and the Cable and Wireless Worldwide (CWW) Section.

Every three years, the Scheme Actuary carries out a full actuarial valuation of the Scheme's assets and liabilities. We like to think of this as a 'health check' of the Scheme's finances. Between each triannual valuation, the Scheme Actuary produces an approximate update of the Scheme based on the assumptions used at the last actuarial valuation.

The most recent actuarial valuation of the Scheme (as at 31 March 2016) has now been finalised and since this date the Scheme Actuary has also performed annual updates as at 31 March 2017 and 31 March 2018, known as the 'actuarial report'.

In these calculations, the Scheme Actuary has assumed that the Scheme will continue to be run in the same way as it is now, known as an 'ongoing basis'.

Below, we've summarised the funding position from the actuarial valuation as at 31 March 2016 and the latest actuarial reports as at 31 March 2017 and 31 March 2018 for both Sections.

Vodafone Section

31 March 2018 (actuarial report)

Assets
£2,467m
-
Liabilities
£2,744m
=
Deficit
£277m
Funding level
90%

31 March 2017 (actuarial report)

Assets
£2,263m
-
Liabilities
£2,733m
=
Deficit
£470m
Funding level
83%

31 March 2016 (actuarial valuation)

Assets
£1,904m
-
Liabilities
£2,251m
=
Deficit
£347m
Funding level
85%

The funding position for the Vodafone Section has improved since we last sent you a funding update, as at 31 March 2017. This was primarily due to the additional contribution of £184.5m paid to the Vodafone Section by the Company in October 2017 which was used to purchase insurance in respect of some of the pensioner liabilities.

The Scheme Actuary also carried out a valuation on the basis that the Vodafone Section wound up on 31 March 2016. The funding level on this basis (known as the discontinuance funding level) was 48%, a deficit of £2,083m. The Trustee is required by law to include this information. It does not mean that there are plans to wind up the Vodafone Section.

Jargon buster

Liabilities – an estimate of the amount the Scheme needs to pay in benefits to members, both now and in the future.

Assets – the value of the Scheme’s investments and monies held to pay benefits to members.

CWW Section

31 March 2018 (actuarial report)

Assets
£2,567m
-
Liabilities
£2,544m
=
Surplus
£23m
Funding level
101%

31 March 2017 (actuarial report)

Assets
£2,588m
-
Liabilities
£2,611m
=
Deficit
£23m
Funding level
99%

31 March 2016 (actuarial valuation)

Assets
£2,266m
-
Liabilities
£2,208m
=
Surplus
£58m
Funding level
103%

The funding position for the CWW Section has improved since we last sent you a funding update as at 31 March 2017. This was primarily due to the additional contribution of £58.5m paid to the CWW Section by the Company in October 2017 which was used to purchase insurance in respect of some of the pensioner liabilities.

The Scheme Actuary also carried out a valuation on the basis that the CWW Section wound up on 31 March 2016. The funding level on this basis (known as the discontinuance funding level) was 71%, a deficit of £906m. The Trustee is required by law to include this information. It does not mean that there are plans to wind up the CWW Section.

The Company’s ongoing support

As part of the actuarial valuation as at 31 March 2016, the Trustee and the Company agreed a recovery plan and a schedule of contributions, which detail the payments the Company will make to each Section to improve the funding level and address the shortfall in each Section.

The Company made payments of £184.5 million into the Vodafone Section and £58.5 million into the CWW Section in October 2017.

The Company remains committed to supporting the Scheme.

Future valuations

The Scheme's next full actuarial valuation for both Sections will be as at 31 March 2019 and the results are expected by 30 June 2020.

There have been no payments to the Company from the Scheme in the last 12 months.

The Pensions Regulator has not needed to use its powers to change the Scheme, give direction on working out its funding target, or impose contribution rates on the Scheme.

Some things you should know if the Scheme were to wind up:

It is not intended or expected that the Scheme will wind up in the foreseeable future. However, if the Scheme were to discontinue, the Company would have to pay enough money into the Scheme to secure all members’ benefits through an insurance company. If the Company didn’t have enough money to secure benefits in full, and the Scheme was eligible, the Pension Protection Fund would take over the Scheme and pay compensation to members, up to a limit.

Information about the compensation provided by the Pension Protection Fund can be found on its website: www.pensionprotectionfund.org.uk


Vgps_funding_update

Funding Update as at
31 March 2017

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