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Daimler sees no new cash drain for pension funding
February 7, 2013 / 2:26 PM / in 5 years

Daimler sees no new cash drain for pension funding

STUTTGART, Germany, Feb 7 (Reuters) - Daimler does not expect any cash drain resulting from contributions to fund pension liabilities, an issue that has gained importance due to the low interest rate environment.

“We don’t plan for a further specific pension contribution in 2013,” finance chief Bodo Uebber told analysts during a conference call on Thursday.

Daimler contributed 350 million euros ($473.83 million) in cash to fund pensions at its EvoBus unit last year.

Companies with defined benefit pension schemes have to calculate the present value of future liabilities using the discount rate, which tracks broader moves in interest rates and bond markets.

The lower the discount rate applied, the higher the present value of those future liabilities. This is prompting more and more companies to have to stump up cash to plug the underfunded status of their pension schemes. ($1 = 0.7387 euros) (Reporting By Christiaan Hetzner)

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