Research undertaken by Dr Brian Bell of Kings College London in conjunction with the think tank found that UK firms allocated roughly £24bn to ‘special’ deficit-funding pension payments last year – £19bn more than would have been the case had pre-2000 levels of deficits continued to prevail.

The analysis identifies a strongly significant negative effect on hourly pay at the level of the individual firm. For every increase in deficit payment equivalent to 1% of the firm’s total wage bill, the hourly pay of its workers is lowered by roughly 0.1%.

The study says the £19bn increase in DB deficit payments is roughly equivalent to 2.5% of the UK’s total wage bill, and argues the implication is that such employer contributions are lowering average employee pay by between 0.2% and 0.3%.

Converting that hourly pay effect into an aggregate annual figure suggests that DB deficit payments are directly lowering employee pay by between £1.4bn and £2.2bn a year. This means that in the region of 10% of the £19bn elevation in special payments can be directly associated with lower hourly pay.

This £2bn drag on pay is worth £200 a year on average to workers in firms with DB pension deficits.

The Resolution Foundation says that the presence of such sizeable DB deficit payments has important implications across generations, with older workers and those already in retirement standing to gain most from the plugging of gaps.

Of the 10.9 million members of DB schemes in the UK, 40% are retired and fewer than 2% are aged under-30 and still contributing. Half of the nearly 6,000 DB schemes in operation are closed to new members and a further third (35%) are closed to future accrual.

The report says the suppression effect is most pronounced among employees who remain active members of the pension scheme, but is statistically significant among deferred members too – that is, those employees who have previously saved into the pension but no longer contribute.

In addition this drag on pay also extends to the lowest paid workers who have never been members of their firm’s pension scheme. The report finds that for those sitting in the bottom quarter of the pay distribution and never having benefited from the DB pension scheme, the reduction in hourly pay associated with a given increase in deficit payments is roughly twice as large as the average effect for all employees. In contrast, the effect on similar workers in the top quartile of earners is not significant.

The Resolution Foundation says that the lowest – and often youngest – earners in deficit-paying firms are therefore suffering pay penalties even though are not the beneficiaries of action to close these pension deficits.

With average earnings still languishing at £16 a week below their pre-crisis peak and a fresh pay squeeze now hitting as inflation rises, the think tank argues both that the growing ‘wedge’ between overall remuneration and employee pay packets warrants greater scrutiny, and that discussions of DB deficits need to broaden from the current focus on whether the schemes concerned are sustainable to include a full assessment of the distributional impact of such deficits on pay, dividends and investment.

Matt Whittaker, chief economist at the Resolution Foundation, said: ‘Our research shows for the first time that there is indeed a link between rising pension deficit payments since the turn of the century and reduced pay.

‘This drag on pay has important implications across generations as low – and often younger – earners in affected firms are losing out on pay even when they are not entitled to the pension pots they are plugging.’

The pay deficit: measuring the effect of pension deficit payments on workers’ wages is here.