Tesco, Diageo and Cadbury are the only FTSE 100 companies still running a defined benefit pension scheme that is open to new members. The remainder have all introduced measures to reduce or freeze benefits completely for new members.
This finding comes as part of Lane Clark & Peacock’s (LCP) 16th annual Accounting For Pensions 2009 survey.
The survey also revealed that FTSE 100 companies have again upped their assumptions of how long pension scheme members will live, adding another £8 billion to balance sheet liabilities. This year saw the first longevity hedge deal by a UK pension scheme, as Babcock International transferred longevity risk for pensioners to the capital markets. LCP expects a number of deals of this type from FTSE 100 companies in the coming months.
Overall, the LCP survey showed largest ever deficit for FTSE 100 pension schemes. The financial crisis has plunged FTSE 100 companies’ UK pension schemes into a £96 billion deficit, more than double the £41 billion estimated a year ago.
Key findings of LCP’s Accounting For Pensions 2009 report include:
- Fallout from the collapse of Lehman Brothers hit pension scheme assets particularly hard. LCP estimates that those FTSE 100 companies which reported in December 2008 revealed losses on pension assets of £42 billion from the beginning to the end of 2008.