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Footsie firms ‘cannot pay off £80bn pension fund deficits’
13.08.09
One in five FTSE 100 companies will be unable to pay off their pension fund deficits, a leading accountancy firm warned today.
KPMG said more final salary schemes were bound to close, with 22% of the largest firms short of spare cash to fund their deficits.
It said half the FTSE 100 firms are already spending as much making up deficits as they are currently contributing to funds, with the deficit of the FTSE 100 up from £20 billion in 2007 to £80 billion.
Mike Smedley, pensions partner at KPMG in the UK, said: “It is unprecedented for companies to be spending as much or more on their defined benefit pension benefits for previous employees than for current staff.
“The fact we are now reaching this point graphically illustrates the increasing unaffordability of defined benefit schemes.
“Unless companies and their pension scheme trustees can work together to ensure pension funding can be managed in a way that does not impact on companies' wider financial flexibility, this is likely to result in more and more companies opting to close defined benefit schemes altogether.”
Reader views (3)
This all came about from the removal pension funds tax credits when G Brown was Chancellor!!
Can not say which is the more serious of his prudent decisions, this pension fiasco or the sale of gold at rock bottom price.
- Pension Victim, Middx, UK
Rather too scaremongering - pension deficits don't have to paid off all at once and depending on sensible valuations are not as difficult as they look. Nonetheless, companies will close schemems as the regulation of the past 10 years has made the situatiuon worse not better.
- Peter Bench, London
What about the £140billion deficit sitting in the Teachers Pension Scheme as reported in the 2008 accounts from the DWP/DFES - that alone never mind the rest of the public sector who on earth is going to or will be able to pay for it!
- Wallytrader, London
