A third of blue chip companies unable to pay pension deficit
KPMG is warning businesses not to sacrifice growth to prop up pension funds. The liability partnership’s caution comes as it revealed more than £11bn was spent on pension deficits in 2009.
According to latest Pensions Repayment Monitor from the global company, one in three FTSE 100 companies are unable to pay pension deficits from current discretionary cash flow.
KPMG said that this was the highest level in the survey’s five year history. It compares with 22 per cent of blue chip companies in 2008 that could not pay off their pension shortfall in any realistic timeframe.
David Fripp, head of pensions at KPMG in the Midlands, said: “At first sight these figures look alarming. But they mainly reflect the consequences of the economic downturn on companies’ profits and cash flow.
“The key message to sponsoring companies, pension fund trustees and regulators is to maintain a long-term view and avoid knee-jerk reactions. The most important thing in securing the future of pension provision is to secure the future of the business, not the other way round.”
