The pension deficit of UK blue chips has fallen £9bn since 2016 as FTSE 100 firms race to fill their huge pension black holes, new data shows.
The Royal Bank of Scotland poured £4.5bn into its group pension fund last year, joining 51 others on the FTSE 100 index that made “significant” contributions to their pension funds, according to JLT Employment Benefits.
However, the total cost of pension liabilities swelled 20pc on the previous year to £705bn, JLT said, increasing the pressure on companies to close generous defined benefit pension schemes that pay out a proportion of an employee’s final salary for life.
“A typical scheme now costs employers more than three times the cost of 30 years ago, largely as a result of increased longevity and changing market conditions,” said Charles Cowling, a director of JLT.
“A defined benefit pension scheme that might have had an employer cost of 10pc to 15pc of payroll in the late Eighties now costs the same employer well over 40pc of payroll.”
Just 19 FTSE 100 firms still provide a significant number of staff with a DB pension scheme.
Although pension deficits are going down, JLT warned that a “significant” number of firms are still sitting on pension pots that represent a “material risk”, with the deficits at 11 household names – including Sainsbury’s – dwarfing their stock market value.
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