KCom confirms closure of final salary pensions

TELECOMS group KCom has become the latest company to close its final salary-pension schemes in a bid to lessen its retirement liabilities.

The Hull-based firm, which provides domestic telephone and internet services in East Yorkshire as well as business services nationally, yesterday confirmed it is closing its two defined benefit pension schemes and severing the link to final salary.

Instead KCom will switch from its current 10 pension schemes to offer a single, defined contribution scheme for all staff.

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"Our aims for this year are to return to growth and to provide medium term certainty with regard to our pension funding position," said the group.

Defined contribution schemes are usually less generous than final-salary or defined benefit pensions. KCom's defined benefit schemes will close to future accrual in September.

Companies are under growing pressure to restructure their pension schemes as a healthier, ageing population, combined with fluctuating asset values, wreak havoc with balance sheets.

The value of the KCom's pension scheme assets, comprised of shares, bonds and gilts, actually grew by 16 per cent over the year to 156.9m. But it still had pension liabilities of 50.4m at the end of March, an improvement on 61m a year earlier.

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As part of a tri-annual valuation, it has agreed to inject 21m into the pension scheme over three years to help repair the deficit. That compares with previous deficit funding of 2.9m a year. Of this, 9.2m will be paid this year, with another two annual payments of 5.9m.

Chairman Bill Halbert said the pension restructuring should help with refinancing negotiations.

"We are due to re-finance the business this year," he said. "We want to be in as strong a position as possible to secure the necessary funding on the best possible terms."

KCom had net debt of 116.8m at the end of March, compared with 157.9m a year earlier. It has multi-currency revolving credit facility of 250m, provided by a group of five banks, but this matures in February 2012.

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Earlier this year insurer Aviva and PC World owner DSG International revealed plans to close their final salary pension schemes.

Telecoms giant BT is currently locked in court proceedings over its pension scheme liabilities.

At the end of 2008, the BT pension scheme had liabilities of over 40bn. Its most recent annual report put the deficit at 7.6bn

Goodfella's pizza and Fox's biscuits maker Northern Foods also faces challenges from its retirement obligations.

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Its pension scheme deficit had more than doubled to 149.7m by the start of April from 71.5m a year earlier.

It faces a triennial valuation of its pension scheme in March 2011, and its shares have been driven down because some analysts believe the group may need to cut its dividend following the review.

KCom said all resolutions were passed at its AGM held yesterday at the KC Stadium in Hull.

KCom also said Kathy Smith has been appointed company secretary, replacing Paul Simpson who continues as finance director.

Bt's vision for broadband

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Telecoms giant BT has been meeting business and council leaders from across Yorkshire to spell out its vision for high-speed broadband.

Bill Murphy, managing director of BT's Next Generation Access programme, yesterday visited Yorkshire with Trevor Higgins, the group's regional manager, to persuade organisations to partner with it.

As part of its 2.5bn investment in fibre optic broadband, it hopes to have linked two thirds of UK premises to super-fast 40 Mb/s broadband by 2015.

"To do that final third is going to take money," said Mr Murphy. "We want to work with government and industry."

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In Yorkshire, it aims for 327,000 premises to have super-fast broadband by the summer of next year.

It aims for 61 per cent of homes and business in the region to at least have copper-based broadband, which has speeds of up to 20 Mb/s, by next spring.