The UK's largest firms are feeling the strain of huge pension deficits according to the latest figures on FTSE 100 and FTSE 350 schemes.

The FTSE 100's pension schemes recorded a total deficit estimated at £90bn at the end of June 2009, a huge loss of £82bn on their position last year, according to Pension Capital Strategies (PCS), while the total FTSE 350 deficit has risen by £5bn to £187bn during the second quarter of 2009, according to Hymans Robertson.

"These are very difficult times for companies and their pension schemes," commented Charles Cowling, managing director at PCS, whose company posted its latest deficit calculations in its The FTSE 100 and their Pension Disclosures report.

"We believe that the Regulator's stance of seeking that trustees react to the economic downturn by putting even more pressure on companies will have major implications for companies' attitudes towards their pension schemes," he said, adding that PCS was now predicting that the large majority of final salary schemes would be closed by 2012.

Hymans Robertson, revealing its findings on deficits in the penSAFE report, said it feared that FTSE350 firms would have to face huge pressure to increase deficit contributions, in turn putting pressure on dividends, investment and other demands on cash flow.

Clive Fortes, partner and head of corporate consulting at Hymans Robertson, explained: "The issues faced by each company will be different, but the past two years have provided a stark reminder of the risks companies run in their pension schemes. What is constant is the need for all companies to have a clear strategy for managing these risks. A typical FTSE 350 company has unmatched pension liabilities of 26p in the pound of market capitalisation, and that is an unrewarded risk; Shareholders and analysts should be pressing company management for a clear strategy to address these risks, enabling management to get back to the job of running the business for the benefit of shareholders."

The penSAFE quarterly update is available here.

- Pensions Age August 2009

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