Alliance Boots is considering freezing its £3.35 billion ($5.36 billion) defined benefit pension fund in the U.K., according to a company announcement.
A consultation period with employees could last for at least three months before a final decision is made, according to a spokeswoman for the company. If approved, defined benefit participants will be transferred to an existing defined contribution plan.
The current defined benefit plan is a combination of two previous plans — the Boots Pension Scheme, Nottingham, and the Alliance UniChem Group Pension Scheme, Weybridge — resulting from a 2006 merger. The Boots plan closed to new members in 2000, and the Alliance UniChem plan closed to new members in 2002. As of March 2009, the combined fund had a £188 million surplus, according to the company's annual report.
The Boots plan follows a liability-driven investing model with an 85% allocation to bonds that match liabilities up to 35 years and a 15% exposure to equity and real estate. The Alliance UniChem plan is split 50-50 with half of the portfolio following an LDI model and the other half in a return-seeking strategy that includes equity, according to the annual report.
The company spokeswoman declined to specify a target date for when the DB plan will be frozen. Information on total assets for the company's DC fund was not available.