Over the last 10 years, the total pension liability of FTSE 100 companies has almost doubled, according to calculations by financial and actuarial consultancy LCP which suggest the financial risks to pension sponsors are increasing under IAS 19 reporting requirements
The annual Accounting for Pensions (AFP) report suggest that the UK’s largest employers have continued to reduce their defined benefit (DB) pension contributions, but warns that pension liabilities are reaching record high levels.
FTSE 100 companies’ combined total of pension contributions came to £12.5bn in 2014, down from £14.8bn the previous year and £16.8bn in 2012.
Bob Scott, LCP senior partner and report author, said: ‘Companies in the FTSE 100 have paid less into their pension funds than they did last year, but many companies still have big pension funds and big deficits.
‘Our report also found that the 10 companies with the largest pension schemes had combined pension liabilities of nearly £350bn, and the 10 companies with the largest pension deficits had a combined shortfall of nearly £40 bn. We have calculated that there is a 10% chance that those deficits could increase by at least a further £25bn over the next 12 months.’
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