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FTSE companies warned over pensions risks

Over half of 59 FTSE companies surveyed would expect to see a deficit in company assets if they had adopted the controversial new pensions accounting standard, FRS 17, according to new research.

Research into the company accounts of 59 FTSE companies – 33 of which are in the FTSE-100, and 26 in the top half of the FTSE-250, found that more than one in three have pension funds exceeding 50% of the company’s net assets.

Over half continue to offer only defined benefits schemes where the risk is transferred to the employee, unlike the traditional defined contribution, or final salary schemes.

Other findings showed that one in five pension schemes hold less than 60% in equities.

Tim Keogh, European partner at Mercer Human Resources Consulting which carried out the research, said: ‘The figures show very clearly that, for a significant minority of companies, pension schemes management is a major business activity in its own right.

‘In some cases, the business is more like a pension fund with a company attached rather than a company with a pension fund. It’s important that the risks are managed accordingly.’

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