The FTSE350 deficit has increased from £163bn to £182bn for the first three months of 2009 due to falling asset values and longer-term inflation concerns, according to Hymans Robertson.

The pension and benefits consultancy's penSAFE report, released quarterly, shows that there are several significant companies that are feeling the strain of their pension commitments. Among these are Lloyds Banking Group and Royal Bank Scotland (RBS), and both these companies are majority owned by the UK taxpayers. Together these banking companies register to a combined penSAFE deficit of £18.5bn - more than ten per cent of the total deficit of the FTSE 350. It would take RBS nearly three years of earning in order to restore its schemes to the full penSAFE funding.

Hymans Robertson's partner and head of corporate consulting, Clive Fortes has said: "The penSAFE analysis puts in to sharp focus those companies whose pension schemes are putting them under financial struggle. Our analysis shows that a typical FTSE 350 company has a deficit equal to 246 days of its annual earnings. I expect to see many companies being faced with a nasty surprise when it comes to agreeing contributions following the next formal actuarial valuation. No doubt there will be pressure on future pension accrual but shareholder dividends will be unlikely to escape unscathed."

The Hymans Robertson's penSAFE report was first published in February 2009. The report puts pensions into context for businesses as it combines the four distinct measures in order to clearly illustrate the strain pension schemes now place on the FTSE 350 firms.

- Pensions Age April 2009

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