Many of the UK’s biggest businesses will spend the coming decades targeting their pension deficits, which remain “stubbornly high” at the present time, according to a report from LCP.
The financial insight provider’s 20th annual Accounting for Pensions report looks at the current level of pension deficits in businesses in the UK, and how this is likely to change over the next two decades.
At the moment, the FTSE100 pension deficit is around £43 billion – a figure LCP says “remains largely unchanged” compared with previous years, despite almost £22 billion made in the form of contributions, and good returns on pension investments.
Just as the government is looking to tackle the deficit in the national budget, some of the biggest brands in Britain will be attempting to do the same, but it could take tens of years before parity is achieved.
Bob Scott, LCP’s partner and author of the report, says: “Many companies will be hoping that, in 20 years’ time, they have managed to completely remove any pensions risk from their balance sheets.
“This may be good news for their shareholders, but is unlikely to improve the lot of those employees who are relying on good workplace pensions for their retirement.”
Reducing the overall deficit could have a further benefit, as it would be likely to also reduce the reliance on the Pension Protection Fund (PPF) to pay out any shortfalls, or in the case of company failures.
This could help to reduce the levy paid into the PPF by businesses – a particularly pertinent concern at present, as invoicing for the 2013/14 PPF levy is due to begin this month.