FTSE100 turns £36bn pension deficit into surplus

FTSE 100 companies have dramatically reduced their pension scheme deficits over the past 12 months, to post a surplus of £12bn.

The latest Accounting For Pensions survey by Lane Clark & Peacock reveals that the FTSE 100 turned around a £36bn deficit from 2006 into a surplus just a year later.

The companies achieved the turnaround through a combination of record contributions into their schemes - of £13bn, and favourable investment returns.

The survey also found that each additional year of life expectancy factored into pension calculations costs the schemes a total of £12bn.

Bob Scott, partner at LCP, said: 'It is encouraging to see UK Pension Schemes of FTSE 100 companies report a surplus after so many years in the red.

'However, the surplus may not survive once companies reflect the latest mortality projections in their accounts. Also, companies whose pension schemes remain heavily invested in equities run material investment risk and the fragility of the surplus was highlighted by recent stock market falls. UK pension schemes are not out of the woods yet.'

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