Half of FTSE 250 companies could pay off their pension deficit within three
years from purely discretionary cash flow, while quarter could pay off their UK
pension deficit within a year, according to a study by KPMG.
Just over a quarter though lack any such free cash flow and would need to
take action such as reducing capital expenditure or cutting back dividend
distribution in order to clear their deficits over the medium term, the firm
Alastair McLeish, head of pensions at KPMG, commented: ‘We would expect to
see that the next rank of companies below the FTSE 100 had less ability to meet
pension deficits than the largest ones, and the study has confirmed this.
‘However, whilst it was encouraging to see that so many could clear their
deficits so quickly from current discretionary cash flows, it remains an
interesting question whether it is in the long term interests of the companies
to do so,’ he added.
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