LONDON (dpa-AFX) - The Royal Bank of Scotland Group plc (RBS, RBS.L) announced that it has entered into a Memorandum of Understanding with the Trustee of the Main Scheme of the RBS Group Pension Fund. The MoU facilitates both the necessary changes to the Main Scheme to align the employing entity structure with the requirements of the UK ring-fencing legislation and acceleration of the settlement framework for the 31 December 2017 triennial valuation.
The Group said the MoU also provides clarity on the additional related funding contributions that will be required to be made by RBS Group to the Main Scheme. A pre-tax payment of 2 billion pounds will be made in the second half of 2018. From 1 January 2020, further pre-tax contributions of up to 1.5 billion pounds in aggregate linked to the making of future distributions to RBS shareholders including ordinary and special dividends and/or share buy backs. RBS intends to pay to the Main Scheme an amount equal to each such distribution (subject to an annual cap on contributions of 500 million pounds before tax) until aggregate pre-tax contributions of up to 1.5 billion pounds have been made.
Ewen Stevenson, CFO, said: 'We are pleased to have reached this MoU with the Trustee of the Main Scheme of the RBS Group Pension Fund. With these proposed payments, together with the one-off contribution into the Fund in Q1 2016 we will have substantially addressed the historical funding weakness that existed in the Fund and brought clarity to future funding arrangements. For our shareholders, this MoU represents a further important milestone towards the resumption of capital distributions.'
Copyright RTT News/dpa-AFX