AB Acquisitions will contribute a sum of£418 million in cash instalments over the next 10 years, which amounts to a net value of£305 million. A bank guarantee and specific security package will also be put in place to back these cash instalments.
In addition, AB Acquisitions has agreed that the scheme will benefit from an additional£600 million security package designed to protect the long-term benefits of its members. The scheme will also receive a£200 million priority claim in respect of any security proceeds derived from the security package, together with an additional£400 million claim on such proceeds, which will rank alongside the claims of the senior lenders.
Boots Pension Scheme Trustee chairman John Watson said: 'Thanks to the efforts of all parties working through the complex issues, we have a common basis of understanding of the funding principles and actuarial assumptions underlying the scheme. We have reached a fair agreement that provides significant security and future certainty to our members.'
AB Acquisitions said: 'We are very pleased to have reached an agreement that will ensure that the Boots Pension Scheme will remain well funded and that the long-term benefits of the scheme members will be safeguarded'
Union Usdaw has welcomed today's agreement between AB Acquisitions and the retailer's Pension Scheme trustees, calling it good news for its members.
The union was concerned about the scheme's long-term future with regards to funding and security, after weeks of uncertainty and media speculation.
Usdaw general secretary John Hannett said: 'Usdaw members who are paying their pension contributions told us loud and clear that they were worried about the future of the scheme, so this agreement to allocate nearly£1 billion appears to address those concerns and put their minds at rest.
'All our members have ever wanted is a commitment from AB Acquisitions that they were prepared to put enough money in to ensure members of the scheme could enjoy a comfortable retirement. This agreement is reassuring news.'