Pensions clarity can hit investor risk perception

COMPANIES which disclose pension liabilities in their accounts are increasingly taking a hit on investor perceptions, regardless of whether or not they have a pension deficit, new research has shown.

Over half of finance directors surveyed in a recent PwC study on attitudes to pensions accounting said that information disclosed in their accounts gave investors a negative impression of the company, even if they are taking action to reduce risk.

“While many companies are taking action to reduce the risk that pension liabilities pose to the business, they are not always getting credit for this by failing to clearly communicate the benefits,” said Brian Peters, a pensions partner at PwC.

“Perversely, risk reduction exercises can sometimes have a negative impact on investors’ perceptions by drawing attention to the significance of pension liabilities.”

The research comes after it emerged that pension liabilities of UK companies had rocketed by a fifth over the past year, reaching a record £1.2 trillion at the end of the summer. Many firms have come under fire recently for running large pension deficits, including BT, British Airways and BAE Systems.