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Good and bad news in pension report

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That’s the story from the latest quarterly report on pension disclosures of FTSE 100 companies by Pension Capital Strategies.

The report has found that the total deficit at 30 September 2007 is an estimated £2bn, which is a whopping £44bn less than a year ago.

But PCS managing director Charles Cowling says that by underestimating life expectancy, the total pension deficit could be understated by as much as £40m.

“Companies need to take a more detailed look at the life expectancy figures that they are applying to their pension scheme to avoid future problems,” he said.

So, how are FTSE 100 pension schemes reducing the deficit? Cowling said they’re “reducing equity holdings and increasing bond allocations”.

“Ten FTSE 100 companies reveal that they have increased bond allocation by more than ten per cent in the period since their previous accounts.”

PCS also reveals that the total disclosed pension liabilities of the current FTSE 100 companies have fallen £2bn to £390bn. Thirteen companies have pension liabilities of more than £10bn.

Many companies have closed their deferred benefit schemes to new entrants but Cowling adds: “To date there has been little sign of FTSE 100 companies backing away entirely from DB pension provision.”

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