Premier Foods has come to an agreement with the trustees of its pension scheme that "significantly reduces the group's cash outflow over the next three years".
The owner of some of Britain's best known food brands concluded its 2016 actuarial negotiations and announced this morning that its pension scheme costs will be £32m lower than previously expected.
The firm's share price jumped up 0.75 per cent in early trading following the announcement.
"We are pleased to have agreed a reduction in our pension scheme obligations with the scheme trustees as we continue to focus on maximising the company's free cash flow generation and debt reduction," said Premier Foods' finance chief Alastair Murray.
While this has been a challenging negotiation, we appreciate the open and constructive dialogue which has taken place with all pension scheme trustees in arriving at this revised agreement.
Although cash costs will reduce in the medium term, in the three years beyond 2020, pension costs will increase by £13m.
Premier Foods has estimated the net present value of the firm's future deficit payments – i.e. the total cost of payments needed to balance the books in today's terms – is the same at between £300m-£320m.