Almost one in ten blue-chip FTSE-100 companies face pension scheme deficits so large they pose a threat to the future of the business, according to research conducted Pension Capital Strategies in association with JP Morgan Cazeenove.
The report the FTSE-100 and their pension disclosures revealed that only five pension funds are in surplus, and estimated that final salary pension schemes at top companies could end within three years.
It also named nine of Britain’s biggest listed companies that face pension liabilities greater than their stock market value. These include Invensys, BAe Systems, Royal Bank of Scotland and insurance group RSA. British Airways and BT disclosed pension liabilities of more than three times their equity market value.
The PCS report said that the total deficit of FTSE-100 companies stands at £66bn, which has not changed in the past year, despite a significant increase in the funding of pension deficits. Overall companies have pumped £11bn into deficit funding over the past year, up from £4.4bn in the previous year. The biggest contribution was made by oil group Royal Dutch Shell, which gave £2.7bn to its pension scheme.
PCS said it expected pension trustees to be increasingly open to approaches to deficit funding, and instead of cash they could be drawn to other assets.
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