Almost half (44 per cent) of FTSE 350 DB pension schemes are now in surplus and 90 per cent could pay off their IAS 19 deficit with less than six month's earnings, according to Hymans Robertson.

In its annual FTSE 350 Pensions Analysis, Hymans Robertson found that 12 per cent of the schemes are sufficiently funded enough that they could currently achieve buyout without any cash injection.

Furthermore, as the trend for consolidation gathers pace, it revealed that 9 per cent of companies could transfer their pension scheme into a commercial consolidator with a cash injection of less than one month’s earnings.

Hymans Robertson head of corporate DB, Alistair Russell-Smith commented: “Companies that have an IAS19 surplus should look for opportunities for risk transfer and ultimately removing the DB scheme from their balance sheet.

“To be able to achieve this the first step is to set a long-term objective that takes account of both improved insurer and emerging consolidator pricing.

“Contributions from cash, investment returns, opportunistic buy-ins, time and member options can then be established, giving a clear path for ultimate risk transfer.”

Despite the positives, Hymans Robertson said that 22 per cent of companies should expect The Pensions Regulator (TPR) to intervene at their next triennial valuation unless they start paying more into their schemes.

Russell-Smith added: “TPR’s been taking an increasingly hard stance in the wake of recent corporate failures.

“This invigorated regulator is likely to put greater pressure on companies to fix the roof whilst the sun shines.

“Recognising this tougher approach and focus on deficit contributions and dividend payments, a minority of companies should plan for regulatory intervention at their next triennial valuation unless they pay more into their schemes.”

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