Defined benefit pension deficits among FTSE 350 companies have dropped by nearly one-third in the last year, but still more than half of firms are operating on a deficit, according to research.
The collective pension scheme deficit for the top 350 listed companies in Britain fell 29 per cent to £39bn last year, from £55bn the year before.
Despite this, 54 per cent of firms still have a pension deficit, a report by consultancy Barnett Waddingham said.
The figures represent a marked improvement over recent years, as the number of firms with a surplus doubled from 23 per cent since 2013.
The deficit reduction has been driven by a combination of increased corporate bond yields and the continuing payment of deficit contributions, the report said.
Barnett Waddingham corporate consulting partner Nick Griggs said: “Defined Benefit scheme liabilities have long weighed on company balance sheets and, despite the measures taken to limit their cost, they remain a far greater drain on resources than their DC counterparts.
“Now is the time to take action and set a new approach. As a growing number of companies can see the light at the end of the defined benefit pension scheme tunnel, it is vital they proactively put in place a strategy targeted at reaching the scheme’s endgame.”
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