Premier Foods has announced it has reduced the pension payments it will make to its schemes over the next three years by £32m.

The company explained that following the finalisation of the 2016 actuarial assumptions, it has agreed on a revised schedule of pension payments between April 2017 and March 2020. This includes reductions and re-phasing of deficit contributions to the Premier Foods schemes and no deficit contributions to the Rank Hovis McDougall (RHM) schemes.

Furthermore, administration costs will be part funded by the RHM schemes by £2m per year for the next three years. As a result, over the next three years Premier Foods, famous for brands such as Homepride and Mr Kipling, will contribution a maximum of £125m to its schemes, rather than a maximum of £157m.

The schedule is revised from March 2014 when, as part of a wider re-financing of the company, Premier Foods agreed a schedule of pension deficit cash contributions with the trustees of the Company's pension schemes, with payments fixed for nearly six years; from April 2014 until December 2019.

As part of these overall reductions, the company has also agreed with the schemes a mechanism (including limited changes to the existing dividend matching agreement) to allow the schemes limited further cash contributions in the event the company outperforms certain agreed profit targets. These targets are materially ahead of current market expectations for the company.

Premier Foods chief financial officer Alastair Murray said: "We are pleased to have agreed a reduction in our pension scheme obligations with the scheme trustees as we continue to focus on maximising the company's free cash flow generation and debt reduction. While this has been a challenging negotiation, we appreciate the open and constructive dialogue which has taken place with all pension scheme trustees in arriving at this revised agreement."

As a result of the announcement shares in Premier were trading up 1.4 per cent at 44.88 pence the morning of Tuesday 28 March.

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