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Big companies pay 'more to shareholders than pensions'

By Holly Williams

Published 17/08/2016

BHS deficit: Sir Philip Green
BHS deficit: Sir Philip Green

The UK's biggest companies paid out five times more to their shareholders than they spent plugging the gaps in their pension funds, according to a new report.

In what is set to fuel anger over pension scheme funding following the BHS collapse, research revealed FTSE 100 firms with defined benefit schemes - offering a guaranteed income in retirement - paid out £71.8bn in dividends last year compared with £13.3bn in pension contributions.

The report - by pensions experts Lane Clark & Peacock (LCP) - found that of the 56 blue chip companies which disclosed a shortfall in their pension funds last year, they paid out £53bn in dividends to investors against £9.5bn in pension contributions.

Those firms could have more than wiped out a combined deficit of £42.3bn with the cash handed out in dividends.

The findings come amid mounting fury over firms putting investors over pension fund members.

Retail tycoon Sir Philip Green recently came under heavy fire in an MPs' report after the collapse of BHS left the chain with a £571m pension deficit, while his family and other investors were paid more than £400m in dividends.

He is in talks with the Pensions Regulator over a rescue deal for the BHS scheme and has pledged to address the funding woes.

Tata Steel, which owns Britain's largest steel works in Port Talbot, is likewise in discussions with the Government over a restructuring for the British Steel pension scheme, which has liabilities of more than £14bn.

LCP cautioned that other firms with pension funding gaps could face action from the regulator on their dividend policy.

Belfast Telegraph

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