22 Oct 2018

Report: Secure and stable pension planning

This LCP report uncovers the key issues which companies should be aware of to give them time to adapt ahead of the year-end. It gauges sentiment of corporate directors, the results of which can be found throughout the report. It also provides an updated snapshot of the FTSE 100 pension scheme financial health.

Key findings

The overwhelming concern of corporates is to reduce volatility and surprises. The report offers some new and reconditioned ideas to help companies construct smooth and stable pension strategies.
At the end of August, about half of the FTSE 100 had IAS19 pension surpluses, which total £50 billion. The other half had pension deficits totalling £20 billion, giving a net FTSE 100 position of a £30 billion aggregate surplus.
Around 80 per cent of respondents believe that companies should mend their pensions roof while the sun’s shining.
The challenge for companies with well-funded schemes is to ensure that their schemes don’t become overfunded with trapped surplus and that capital is used efficiently.
Sex equalisation could hit FTSE 100 profits by £15 billion. Companies need to be aware of this funding and accounting risk – it’s been around for many years, but clarity and therefore crystallisation might now be just around the corner.