FDs warned against overfunding pension schemes

Finance directors should urgently check their their companies’ pension
funding arrangements in case they are ploughing too much into schemes.

Improved performance in the markets has led to an improvement in the value of
pension schemes, and businesses might now be wasting money by overpaying into
staff schemes that previously faced big deficits, warns pensions experts Hymans

‘Most pension schemes have experienced significant improvements in their
finances over the last six months and if the same FDs were negotiating their
pension contributions now, the outcome would most likely be much lower
contributions,’ said Martin Potter, partner at Hymans Robertson.

‘Companies paying more than necessary on pension deficits are in serious
danger of harming their bottom line. This is real money and once paid into a
pension scheme the prospect of ever getting it back is negligible. Improved
funding positions are also a great platform for taking some investment risk off
the table and “cashing in some of their chips” as it were.’

Fears have also grown that accounting rules could force pension surpluses to
be recorded in the accounts as

Further reading:

Pensions fears over over-funded schemes

Employee benefits: pensions

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