9th October 2009, London: Pension Capital Strategies Limited (PCS) has carried out research into trends over the last 3 years in the pension schemes of the FTSE 350 and has published its first report on the findings today. This report will continue on an annual basis.
Charles Cowling, Managing Director, PCS, says "The total pension deficit in the FTSE 350 pension schemes is estimated to be £102billion at the end of June 2009. This figure has increased from £34billion three years ago despite FTSE 350 companies paying £19 billion of deficit funding into their pension schemes over this period. This shows the ever growing tension with Defined Benefit (DB) pension provision in the FTSE 350".
Companies are reacting to the combination of difficult economic conditions, rising pension costs and increasingly aggressive pension regulations by closing pension schemes to future and even current employees. Already, more than a third of all FTSE 350 companies do not have a DB pension scheme. The decline in DB pension provision is reflected in the total service cost in the latest FTSE 350 accounts of £8.0 billion, which compares to £9.4 billion in 2007.
Charles Cowling continues, "What is even more worrying is that 39 FTSE 350 companies have disclosed pension liabilities greater than the total equity value of the company, and 12 FTSE 350 companies have disclosed pension liabilities valued at over double the company equity value. How can companies expect to survive and prosper in an already challenging economic environment when they have to spend so much time and resource trying to manage their DB liabilities"?
PCS believes that the majority of FTSE 350 companies will cease DB pension provision to all employees within two to three years.
The PCS report, The FTSE 350 and Their Pension Disclosures, explores the pension disclosures of the FTSE 350 companies, as well as the steps being taken to address pension scheme deficits. To access the latest The FTSE 350 and Their Pension Disclosures report, please refer to the PCS website at: www.pensionstrategies.co.uk
Charles Cowling 07920 834047
Isabella Young 020 7558 3387/07920 586032
About Pension Capital Strategies
Pension Capital Strategies (PCS) was established in 2006 to help companies to manage their Defined Benefit pension obligations, offering advice on managing scheme assets and liabilities, on communication with trustees and on finding the right funding solutions.
A subsidiary of the Jardine Lloyd Thompson Group, PCS can draw upon skills and experience in the areas of corporate finance, tax, capital markets, asset management, actuarial and general pension regulation and practice to provide strategic advice and practical answers.www.pensionstrategies.co.uk