Pensions gap shrinks as firms make bigger contributions

The
pensions shortfall faced by the UK’s biggest companies has fallen during the
past year as firms doubled their contributions to the schemes, according to new
research.

The
deficit faced by FTSE 100 companies with final salary pensions fell to £42bn
from £55bn during the year to the end of July, according to actuarial
consultants Lane, Clark & Peacock (LCP).

The
firm credited the fall to higher stock market returns and a doubling in the
amount firms paid into the schemes.

But
LCP warned that contributions need to rise further as companies held an average
of only £84 of assets for every £100 of liabilities.

LCP
also warned that the £42bn pensions deficit could rise by a further £20bn once
recent estimates on increased life expectancy were factored in, more than
wiping out the reduction made during the past 12 months.

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Overall
only four of the 89 FTSE 100 companies with final salary schemes reported a
pensions surplus in their 2003 accounts.

By Mike Berry