Capita agrees pension deficit reduction

FTSE 250 outsourcer Capita has agreed reduction of its pension deficit with the Trustees of its Pension and Life Assurance Scheme.

The company has agreed a deficit recovery plan over the next four years, with payments totalling £176m. It will pay £42m this year, £71m next year, £59m in 2020 and £4m the year after that.

Capita - which came under fire last week for a cervical cancer screening blunder that affected nearly 50,000 women - said the plan aligns with its transformation programme and reflects the higher-than-expected proceeds received this year from its disposal programme.

Chief executive officer Jon Lewis said: "This agreement is an important milestone in Capita’s transformation and a further reflection of the importance we place on good corporate responsibility.

"I made a commitment to our stakeholders to address our pension deficit shortly after I joined Capita and I am pleased that our financial strength and successful disposal programme have allowed us to deliver on this."

Lewis announced back in January that he was initiating a transformation programme to improve the company’s performance. He said at the time that his priority was to strengthen the balance sheet through cost savings, non-core disposals and new equity.

"Significant change is required for Capita’s next stage of development," Lewis said on 31 January.

"We are now too widely spread across multiple markets and services, making it more challenging to maintain a competitive advantage in every business and to deliver world class services to our clients every time.

"Capita has underinvested in the business and there has been too much emphasis on acquisitions to drive growth. As our markets have evolved, the group has not responded consistently to new customer demands. Since December, we have continued to experience delays in decision making and weakness in new sales.

"Today, Capita is too complex, it is driven by a short-term focus and lacks operational discipline and financial flexibility."

At 1320 GMT, the shares were down 1.9% to 108.10p.