Top firms in a bid to fill pension gap

BRITAIN’S top companies doubled the amount they paid into pension schemes in 2009 compared to 2008, according to a report by actuaries Lane Clark & Peacock (LCP).

In an attempt to plug gaps in company pension schemes, FTSE 100 firms put £17.5bn into defined benefit schemes in 2009, a rise of 50 per cent on the previous year.

The figures come from the 17th annual Accounting for Pensions report from LCP, and show Royal Dutch Shell made the largest contribution of £3.3bn – a rise of £2.5bn.

Lloyds Banking Group, Royal Bank of Scotland and Unilever also paid more than £1bn into their defined benefit schemes, and eight companies paid more to their pension schemes than they did to their shareholders in dividends. The contributions drove the aggregate FTSE 100 pensions deficit – the difference between funds held and the amount of money needed to pay out to retirees – down from £96bn, a record high, to nearly half of that at £51bn.

The government’s switch from using RPI to CPI for how pensions are calculated could have helped reduce that figure further, as historically, the CPI has risen by around 0.5 per cent less than the RPI, which means pensions linked to final salary will rise more slowly. LCP estimates the overall deficit for FTSE 100 firms may now be £30bn lower than when it produced the report.