Report: A turning point for FTSE 350 pensions?

Barnett Waddingham provides an overview of 2017 in terms of the changes in funding levels and deficit contributions to workplace pensions in the FTSE 350. Its report finds that, after a challenging few years, 2017 was a more positive year for the FTSE 350 defined benefit (DB) schemes.

Key findings

• The benefits paid from FTSE 350 DB schemes totalled £42 billion in 2017, with around £14 billion of this being a result of transfers to defined contribution (DC) schemes.
• The average deficit contribution paid by FTSE 350 companies as a proportion of dividends remained at 10 per cent in 2017.
• Contributions to DB schemes made up close to 70 per cent of the FTSE 350 companies’ total pension cost.
• Pension deficits as a proportion of market capitalisation reduced in 2017, while deficit contributions as a proportion of free cashflow remained steady, despite another increase in deficit contributions.

The report warns that although 2017 was a positive year, it wouldn’t have taken much for it to have been a different story. With this in mind, it highlights that companies should ensure that they are comfortable that the appropriate measures are in place to manage their DB pension scheme risks.