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‘DB liabilities are stifling shares’

Thirty-six per cent of companies feel that the increasing cost of funding their defined-benefit pension scheme is adversely affecting their share price.

In a survey by Aon Consulting of 115 of the UK’s biggest DB schemes, 38 per cent were also concerned that their scheme deficits could cause their share price to dip in future.

Fifty per cent thought the rising cost of funding their DB scheme was hampering their ability to compete in the market, rising to 58 per cent when asked if their projected future pension commitments would continue to impact on competition.

Forty per cent saw pension deficits as contributing to the increasing costs of goods and services in the UK.

Principal and senior actuary Paul McGlone says: “Companies have a responsibility to their shareholders to ensure that their pension schemes are properly managed.

“Even as many companies look to close their DB schemes to new entrants, the existing deficits need to be actively managed or many companies may have further nasty surprises in store for them.”

Key Financial Planning director Dominic Mansley says: “I know of a number of smaller schemes set up many moons ago that are being handled by IFAs that do not understand the issues. IFAs need to be educated so they can play a role helping these firms.”

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