Severn Trent recorded a £452.9m deficit for its three defined benefit schemes as at 31 March 2019, its end of year results have revealed.

The deficit, on an IAS 19 accounting basis, is a £66.9m improvement on the £519.8m recorded over the same period last year, which has seen its funding level improve from 82 per cent to 84 per cent.

The group currently runs three defined benefit schemes, two from Severn Trent, the largest and both closed to future accrual, as well as one from Dee Valley Water.

Following the last valuation of the two Severn Trent defined benefit schemes completed in 2016, the trustees agreed to pay inflation linked payments of £15m a year until 31 March 2031, a further £8.2m per annum until 31 March 2032 and £10m deficit reduction payments in the three years to 2019.

The next formal valuation of the schemes is underway.

Deficit payments to the Dee Valley Water pension scheme were stopped following its 2017 valuation.

Going forward, the group said that lower interest rates, higher inflation and underperforming equity markets may require it to “provide more funding for our pension schemes”.

It added the cost of guaranteed minimum pensions equalisation was recorded at £9.6m for the year, after taking independent advice from the firm’s actuaries.

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