Dairy Crest has revealed it is to change the way future employee pension entitlements are uprated each year by switching from the retail price index (RPI) to the consumer price index (CPI). The CPI rate is almost always the lower one, with the most recent figure being 2.6% compared with 3.6% for RPI.
The firm said that on an actuarial basis the change will cut annual pension costs by £75 million a year, with the real-terms reduction to the firm being worth £12 million over the next two fiscal years, amid payments made into the scheme estimated at £10 million in 2017-18 and £15 million in 2018-19.
A settlement from the dairy giant said: "These contributions, along with gradual de-risking of interest rate exposure and risk-asset exposure, should result in a self-funding position for the fund by that date." The deficit has already fallen, dropping to £100 million in March 2016 from a high of £145 million three years earlier.