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European firms are sitting on extra 270bn pension deficit

Top European firms are underestimating their pension obligations by &euro;300bn (&pound;270bn), with Royal Bank of Scotland and Lloyds Banking Group among the worst offenders, according to new figures.<br /><br />Lloyds has underestimated its obligations by &euro;14.2bn, more than any other European firm, followed by RBS, which has unrecognised liabilities of &euro;13.3bn, according to calculations by equity research firm AlphaValue.<br /><br />AlphaValue said many firms had underestimated their true pension obligations by assuming a low level of wage inflation, and by adopting a high discount rate in calculating the present value of future payouts.<br /><br />The combined pensions deficit of 430 major listed European firms rose 22 per cent to &euro;280bn last year. AlphaValue said that left an unacknowledged pension obligation of &euro;300bn, equivalent to nine per cent of the shareholders&rsquo; equity in the firms.