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Pension deficits at largest firms soar to £96bn

The pension deficits of FTSE 100 firms have soared to a record £96bn, exerting renewed pressure on remaining defined benefit schemes, research by Lane Clark & Peacock has found.

This year’s figure is more than double that of a year ago when the deficit totaled £41bn as the fallout from the collapse of Lehman Brothers has hit pension assets hard.

LCP estimates that those FTSE 100 firms which reported in December 2008 collectively revealed losses on pension assets of £42bn for the year.

The report warns that some companies are not doing enough to manage the risks posed by pension schemes to their business as even though 46 FTSE 100 firms noted this threat, just 17 put in place a strategy in their annual accounts to address this.

The report found that only three FTSE 100 companies are still publicising their defined benefit schemes for new employees.

Firms have also increased their assumptions about how long scheme members will live, putting an extra £8bn aside to cover these extra costs.

LCP partner Bob Scott says: “The collapse of Lehman Brothers in September 2008 had a significant impact on the UK pension schemes of FTSE 100 companies.

“Asset values fell sharply yet, paradoxically, the effect did not show up immediately in company accounts as corporate bond yields rose and inflation expectations fell.

He adds: “However, since March this year, deficits have ballooned as aggressive cuts in interest rates and quantitative easing have caused these factors to reverse.”

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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Pension deficits at largest firms soar to £96bn
    Another triumph for Crash Gordon’s monumental mismanagement of the economy and taxing the nuts off everything in sight.

  2. And what of public sector pensions?
    Meanwhile the Government and public sector unions expect private sector workers to pay taxes to fund public sector pensions so that they can retire early on a guaranteed index linked scheme for life. How fair is that?
    SIMON MANSELL TEMPLE BAR IFA LTD

  3. Public sector pensions
    And what reduction in public sector pensions have we seen?

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