The next two to three years will see the end of defined benefit (DB) pension provision to all employees within the majority of FTSE 350 companies, predicts Pension Capital Strategies Limited (PCS).

Research by the firm into trends over the last three years in these pension schemes, which it intends to repeat on an annual basis, found that companies are reacting to economic conditions, rising pension costs and increasingly aggressive pension regulations by closing schemes to future and current employees. More than a third of all FTSE 350 companies do not have a DB scheme, and the total pension deficit in the FTSE 350 pension funds at the end of June 2009 was estimated to be £102bn.

"This figure has increased from £34bn three years ago despite FTSE 350 companies paying £19bn of deficit funding into their pension schemes over this period," said Charles Cowling, managing director at PCS. "This shows the ever growing tension with defined benefit pension provision in the FTSE 350."

Cowling added: "What is even more worrying is that 39 FTSE 350 companies have disclosed pension liabilities greater than the total equity value of the company, and 12 FTSE 350 companies have disclosed pension liabilities valued at over double the company equity value. How can companies expect to survive and prosper in an already challenging economic environment when they have to spend so much time and resource trying to manage their DB liabilities?"

The report, The FTSE 350 and Their Pension Disclosures, looks at the pension disclosures of the FTSE 350 companies and steps being taken to address deficits, and is available here.

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