View more on these topics

Boost for big firms’ DB funding levels

Research from Pension Capital Strategies shows defined-benefit pension funding levels within the UK’s biggest companies improved by 8 per cent this year.

The value of assets owned by FTSE 100-listed pension schemes rose from £383bn in November 2009 to £394bn in November this year, spurred by rallying equity markets. Liabilities dropped from £475bn to £444bn as businesses increased the funding available to plug deficits.

Pension Capital Strategies managing director Charles Cowling says companies with big DB liabilities will get a shot in the arm after the Department for Work and Pensions switched the inflation index used to calculate annual pension increases from the RPI to the CPI.

He says: “We believe the move could reduce liabilities by as much as 10 per cent, meaning the liabilities of UK private sector pension schemes could fall by up to £120bn.

“However, the change will be likely to cover only statutory increases in pensions which would reduce the impact of the change by half.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment