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05/08/2009
'Largest Ever Deficit' In Top Pensions
The financial crisis has plunged the pensions schemes of Britain's leading companies into a £96 billion deficit, more than double the £41 billion estimated a year ago, a report has revealed.
The 16th annual Accounting or Pensions report from consulting actuaries Lane Clark & Peacock said that the deficit, which was calculated using data from mid-July 2009, is the largest recorded shortfall recorded under the IAS19 accounting standard currently used for pension schemes.
The report said that the fallout from the collapse of Lehman Brothers in September 2008 hit pension scheme assets particularly hard.
In the wake of the financial crisis, the report found that companies were cutting back further on their defined benefit schemes. Only three FTSE 100 companies - Cadbury, Diageo and Tesco - still offered final salary pension schemes to new members.
Bob Scott, partner at LCP, said: "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. However, since March this year, deficits have ballooned as aggressive cuts in interest rates and quantitative easing have caused these factors to reverse.
"Looking ahead, the outlook for the economy and financial markets remains unclear, creating further uncertainty for pension scheme finances. Those companies which work with their pension scheme trustees to identify and reduce pensions risk will be better placed to weather any future financial storms than those which fail to act."
(KMcA/BMcC)
The 16th annual Accounting or Pensions report from consulting actuaries Lane Clark & Peacock said that the deficit, which was calculated using data from mid-July 2009, is the largest recorded shortfall recorded under the IAS19 accounting standard currently used for pension schemes.
The report said that the fallout from the collapse of Lehman Brothers in September 2008 hit pension scheme assets particularly hard.
In the wake of the financial crisis, the report found that companies were cutting back further on their defined benefit schemes. Only three FTSE 100 companies - Cadbury, Diageo and Tesco - still offered final salary pension schemes to new members.
Bob Scott, partner at LCP, said: "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. However, since March this year, deficits have ballooned as aggressive cuts in interest rates and quantitative easing have caused these factors to reverse.
"Looking ahead, the outlook for the economy and financial markets remains unclear, creating further uncertainty for pension scheme finances. Those companies which work with their pension scheme trustees to identify and reduce pensions risk will be better placed to weather any future financial storms than those which fail to act."
(KMcA/BMcC)
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The combined pension scheme deficit of FTSE 100 listed companies has soared to over £55 billion in the year to July 2003, according to a report published today by actuarial consulting firm Lane Clark & Peacock (LCP). The report says that the estimated deficit equates to 6% of the total market capitalisation of the FTSE 100.
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The combined pension scheme deficit of FTSE 100 listed companies has soared to over £55 billion in the year to July 2003, according to a report published today by actuarial consulting firm Lane Clark & Peacock (LCP). The report says that the estimated deficit equates to 6% of the total market capitalisation of the FTSE 100.
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