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FTSE 100 companies
are putting £80bn at risk through their pension schemes, according
to advisory firm Deloitte.
The investment strategies are exposing their corporate sponsors
to significant risk, which could result in the loss over the next
12 months. Due to the deterioration of pension funding levels on
the back of economic instability, the accounting value of FTSE 100
pension schemes has been pushed back into the red, and Deloitte
estimates that the aggregate position has worsened since the start
of 2008 from a surplus of £15bn to a deficit of £23bn.
David Robbins, pensions partner at Deloitte, commented: “We
estimate that the average FTSE 100 company is currently putting
eight per cent of its market value at risk through its pension scheme.
Our analysis shows a wide variation in the pensions risk being taken,
from less than one per cent of company market value to more than
100 per cent, but the bottom line is that most companies are taking
too much risk in their pension schemes.”
Deloitte has suggested that companies should react to the risk by
taking action and considering other options, such as matching expected
benefit payments using bonds or derivatives, offloading risk by
selling the liabilities to an insurance company, or using transfer-out
programmes for former employees.
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Pensions Age July 2008
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