06 July 2008
Two surveys by pension consultant firms show that the falling
equity markets have led to an overall increase in the deficits in
large final salary pension schemes. The research by Aon Consulting
and Watson Wyatt show the pension funds of FTSE companies are
overall back in the red, on paper, after a brief period of being
back in surplus. The 200 largest have a combined shortfall of
£36 billion.
Commenting on the latest figures and what they mean for pension
scheme trustees, Aon Consulting said: "Pension schemes' finances
are expected to be volatile and for most schemes, this month's
results should not cause undue concern. Although it is a
significant sum, UK pension scheme sponsors can absorb a one month
loss of £36 billion."
The security a scheme's financial position relies in part on the
scheme's cash reserves, in part on the actual rate that it has to
pay pensions out at, but mainly on the financial strength of the
employer sponsor the scheme. Many pension schemes have a strong
sponsor, but all pension trustees have a duty to keep an eye on the
position.
Source: LexisNexis Butterworths
