Specialty chemicals manufacturer Croda has slashed its post-tax pension deficit almost 30 per cent in the past six months.

Croda’s first half results reveal a deficit of £86.9m, down from £120.9m at the end of last year.

The reduced deficit is largely a result of a £38.4m company contribution to the scheme. The payment is the second and largest of a series of contributions agreed with the trustees following the triennial valuation in 2011.

Croda, with a market cap of £3.3bn, saw before tax profit increase 6.3 per cent to £133.1m for the first half, and attributed the improvement in part to reduced pension fund interest as a result of the lower deficit.

Yorkshire-headquartered Croda expects a return on scheme assets minus interest on liabilities of £2.4m for the period. This compares to £4.3m for the second half of 2012, and £8.5m last year.

Under the agreement with trustees, the sponsor made a £20.4m contribution in 2012, £38.4m in 2013, and will contribute £20m plus inflation for each of 2014 and 2015.

Croda's UK scheme is over 90 per cent funded on an IAS19 basis. It has around 5,200 members.

The most recent update from the Pension Protection Fund shows scheme funding positions improving in general.

The fund’s most recent PPF 7800 index, which covers almost all UK schemes, showed the average DB scheme funding level had increased to 89.1 per cent at the end of last month, from 83.7 per cent at the start of the year.

Almost 4,700 schemes were in deficit, with an average funding gap of £37.3m.

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