FTSE 100 pension deficit down
Pension scheme deficits in the FTSE 100 have dropped by £13 billion in the last year, according to a new report from actuarial firm Lane Clark & Peacock (LCP).
The total deficit now stands at £42 billion, down from £55 billion. Only four FTSE 100 companies reported a surplus.
The report found that the UK’s leading companies have doubled their contribution to pension schemes but warned that contributions may need to rise further as companies hold only £84 in assets for ever £100 of liability.
Increasing life expectancy could also push up the bill.
The actuaries warn that the FTSE 100 index would have to climb above 5900 to wipe out the deficit without increasing contributions. The index currently stands at 4382.
Report author Chris Tavener, said pension holders should not expect that the increased contributions will continue, saying: “The improvement in pension deficits has come at a big price for some blue chip companies and it’s difficult to see companies sustaining these increased levels of contribution in the future. It will be a question of who is more important, the shareholders or the pension scheme members”.
The Scottish Trade Union Congress welcomed the news of the improved position, but said there was a long way to go. Assistant secretary Ian Tasker, said: “Many employers are still closing secure final salary pension schemes placing workers’ deferred pay at risk.
“Unfortunately the improvement in the deficit figure does nothing for those who have witnessed their final salary scheme being closed without consultation and having less favourable and high risk schemes thrust upon them.”
