2.29 At the time of the sale to Carlyle, actuaries advising QinetiQ estimated the pension fund deficit to be £75 million. The Government Actuary's Department, advising the Department, believed that actuarial evidence supported a total reduction in value in the range nil to £70 million. Carlyle negotiated from the Department an immediate reduction in the value of the business of £25 million25 plus a pension indemnity capped at £45 million to cover any future deficit. This effectively gave the Department the opportunity to benefit from a future recovery in the market. The indemnity was payable on the earlier of a flotation, sale, or 28 February 2008 if the deficit remained. At the flotation the total pension deficit was greater than £45 million and therefore the full £45 million indemnity was paid into the QinetiQ pension fund; the Department, as one of the shareholders of QinetiQ, benefited from the increase in the value of the company. At the time of the sale to Carlyle, the present value of the total reduction in value was £59 million.
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25 Equivalent to a £10 million reduction in the value received by the taxpayer (see paragraph 2.25).