The total pension fund deficit in FTSE-100 pension schemes as at 31 March 2007 is estimated to be 20 billion, down from 40 billon one year ago and down from 35 billion in January 2007. Or so concludes the latest quarterly report on the FTSE-100 companies from Pension Capital Strategies Ltd (PCS), the pensions risk management and recovery Adviser.
The PCS report, The FTSE100 and Their Pension Disclosures, published in association with Numis Securities, explores the pension disclosures of the FTSE100 companies, as well as the steps being taken to address pension scheme deficits. The report released on Friday contains updated pension deficit and disclosure details from the FTSE100 and includes the most recent financial information from the companies’ annual report and accounts.
Despite the apparently substantial improvement, PCS warns that the corporate pension fund disclosures on mortality assumptions suggest that the FTSE100 companies are still underestimating the impact of future improvements in longevity.
Sixteen companies show a pension surplus in their most recent annual report and accounts, compared with only five companies as at 31 December 2006. In addition, the total amount contributed to FTSE100 pension schemes has increased from 11.8bn to 13.4bn. This includes deficit contributions, which now total 5.1bn.
“The latest report reflects a number of important findings,” says Charles Cowling, Managing Director of PCS. “Whilst the total pension deficit of FTSE100 companies has improved, we still believe that FTSE100 companies are underestimating future life expectancy by two to four years. This failure to take into account increasing longevity could mean that the total pension deficit of the FTSE100 companies could be as much as 80 billion.”
The latest The FTSE100 and Their Pension Disclosures report can be found at: www.pensionstrategies.co.uk.