Scramble to plug pensions deficit could stifle recovery, warns report
The strain on Britain's blue-chip companies to tackle gaping pension deficits could hold back recovery and leave a generation of workers without enough to retire on, a report warned today.
Major companies pumped a record £17.5bn into pension schemes last year, helping to cut the FTSE 100's total pension deficit by almost half to £51bn, according to the Accounting for Pensions report from actuaries, LCP.
The huge increase in contributions comes as trustees call for more funds to address deficits following the financial crisis - which LCP said could hinder the fightback from recession for many businesses as well as hitting investors.
Partner Bob Scott said the record level of payments was "reassuring for scheme members" but added: "Such increases in contributions reduce the scope for companies to pay dividends and to invest in their businesses."
Mr Scott also warned that the push towards cheaper schemes as lucrative final salary pensions are closed and scaled back ignored the social consequences of leaving large numbers of people without sufficient retirement savings.
The report showed oil giant Royal Dutch Shell was the biggest contributor - adding £3.3bn to its scheme - while Lloyds Banking Group, Royal Bank of Scotland and consumer goods firm Unilever all paid in more than £1bn.
Eight firms in the FTSE 100 paid more into their pension schemes than they did in dividends to shareholders, LCP added.