Pension risk reduction measures help firms weather economic storm

Firms that have taken steps to reduce pension risk were far better placed to deal with the economic collapse, according to the Lane Clark and Peacock (LCP) pensions report published yesterday.

Twenty-three of the FTSE 100 companies took measures to resist the financial turbulence. These included a substantial reduction in equity holdings, use of financial swaps, and the purchase of annuities.

Standard Life’s pension assets rose by 14% over 2008, Rolls-Royce Group went up by 8%, and Friends Provident by 3%, the report said.

However, the report also revealed that just 17 companies admitted having a substantive policy for managing pension risk.

The report also revealed that firms listed in the FTSE 100 stock index had a combined pension deficit of £96bn last month, more than double the £41bn estimated a year ago by LCP.

Only three of the top 100 companies – Cadbury, Diageo and Tesco – still offered final salary pension schemes to new members, though more closures of final salary schemes were expected, claimed the report.