The FTSE 350 pension deficit has reached GBP61 billion and funding levels have fallen to 85%, according to a survey by Mercer, a financial consultancy.
According to the Quarterly Pension Deficit Survey, which analyses the aggregate pension commitments for FTSE 350 companies, even if company contributions treble compared to 2007, average recovery plans will still extend to beyond 15 years.
Deficits on the scheme-specific funding basis used to determine company contribution levels are also likely to be far larger than shown in companies accounts. The median deficit amongst FTSE350 companies is estimated to have increased from GBP40 million at 31 March 2007 to USD225 million currently.
The decline in funding levels is likely to prompt trustees to issue demands for increased funding at a time when resources are scarce, said Mr Collinson, leader of the Integrated Retirement Financial Management group at Mercer. Fortunately, the Pensions Regulator has indicated that trustees may be sympathetic to company requests to pay lower contributions, where it is clear that higher contributions are not affordable.