According to Moore Stephens
International accountant and shipping adviser Moore Stephens has warned that the latest valuation relating to the post-1978 (new) section of the Merchant Navy Officers Pension Fund (MNOPF) will place further financial strain on shipping companies involved in the scheme.
Under the valuation, the MNOPF trustees reported a funding shortfall as at 31 March 2012 of 492m. Although this is less than had been anticipated, it nevertheless represents an increase of 152m (discounted to 120m) on the deficit recorded in the 31 March 2009 valuation.
To eliminate the funding shortfall, the trustees have called for additional contributions with a present value of 120m as at 31 March 2012 under a recovery plan beginning from 30 September 2013 and ending on 30 September 2025. There is a payment by instalment option, but companies with a deficit of more than 250,000 will have to submit to a new credit assessment in order to qualify for this.
Employers’ contributions for existing members are also increasing, from 15.5 per cent to 20 per cent, while active member contributions are going up from 9.5 per cent to 12.2 per cent.
Michael Simms, a partner with the shipping group at Moore Stephens, says,“These changes will come as a further body-blow to companies which have been under severe financial pressure for the past five years due to the global financial downturn and the combination of declining freight rates, increased competition and higher operating costs in the shipping industry. In addition to the principal sums required, companies will also have to factor in the cost of their accounting requirements and assess the impact on loan covenants and other banking arrangements. For those opting to pay by instalments, meanwhile, there is the additional cost of undergoing a new credit assessment, which is not insignificant. For shipowners already struggling to keep their heads above water, these increased pension costs represent an unwelcome, if not entirely unexpected, additional financial burden.”
Visite Moore Stephen’s official website for more details at http://www.moorestephens.com/shippingandtransport.aspx
