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Pensions & benefits

Accounting
for pensions 2017

Our report, now in its 24th year, reveals the state of FTSE 100 companies' pensions... "£150bn to go backwards"

Over the past 10 years, FTSE 100 companies have paid around £150 billion into their defined benefit pension schemes, but the continued rise in liability values (by more than 85%) has meant that the net accounting position has worsened.

 What's inside Accounting for Pensions 2017?

  • The accounting deficit in respect in UK pension liabilities improved from 2016 due to strong returns on assets, and a record level of contributions
  • FTSE 100 companies paid four times as much in dividends in 2016 as they did in contributions
  • 28 companies reduced the assumed life expectancy in their pension scheme
  • Pension liabilities could reduce by £30bn if those using RPI were able to switch to CPI
  • There are now no traditional final salary pensions for new recruits at FTSE 100 companies
  • There is a significant DB vs DC savings gap with the amount required to provide for a typical DB pension being 55% of salary compared to DC pensions at 3% of salary under auto-enrolment
  • Liabilities may be being overstated – adopting improved methods of setting accounting assumptions could reduce the combined accounting liability for FTSE 100 pensions by £25bn
  • Pension schemes continue to pose a very significant potential risk for certain companies

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