Research from Lane, Clark & Peacock (LCP) released today brings grim news to the pensions industry, reporting the UK FTSE 100 pension schemes deficit has reached £96 billion - more than double the £41 billion estimated this time last year.
And the survey shows some FTSE 100 companies could be paying insufficient attention to their pension risks. LCP found that while 46 FTSE 100 companies identify pensions as a key risk to their business, only 17 set out a policy in their report and accounts for dealing with pension risk.
But some FTSE 100 schemes, such as Standard Life and Rolls Royce, benefited from earlier action taken to reduce risk last year. Both bucked the trend and disclosed gains on pension assets from the beginning to the end of 2008 of 14% and 8% respectively.
Bob Scott, partner at LCP, said: "The collapse of Lehman Brothers in September 2008 had a significant impact on the UK pension schemes of FTSE 100 companies. Asset values fell sharply yet, paradoxically, the effect did not show up immediately in company accounts as corporate bond yields rose and inflation expectations fell. But since March this year, deficits have ballooned as aggressive cuts in interest rates and quantitative easing have caused these factors to reverse.
"Looking ahead, the outlook for the economy and financial markets remains unclear, creating further uncertainty for pension scheme finances. Those companies that work with their pension scheme trustees to identify and reduce pensions risk will be better placed to weather any future financial storms than those that fail to act."
Only three FTSE 100 employers disclose they have defined benefit pension schemes new recruits can join
Cadbury, Diageo and Tesco are the only UK FTSE 100 employers that reveal in their financial accounts they still offer defined benefit pension schemes to new joiners.
