Company pensions face shortfall

Top firms are facing pension funding shortfalls

The pension schemes of hundreds of thousands of workers could be in jeopardy, according to a leading firm of actuaries.

A growing number of pension funds, run by some of the UK's largest companies, are worth less than the benefits that members of the scheme are entitled to claim.

Falling interest rates and increasing longevity are hitting defined benefit pension schemes hard, and low or negative returns on pension fund assets are compounding the problem

Brian Wilson of Bacon & Woodrow

The study by Bacon & Woodrow of final salary pension schemes, revealed that 17 schemes run by FTSE 100 companies were unsustainable at current funding levels, compared with only seven last year.

In one instance, the size of the deficit was almost £170m.

With two of the FTSE 100 companies already making extra payments to prevent a shortfall, a growing number of people could be asked to top up their pension funds.

Pensions crisis

The current problems are based around current stock market volatility and lower returns.

But the latest figures are likely to call into question how closely some pension funds are being administrated and projections monitored.

The majority of company schemes in the FTSE 100 were in fact over-funded.

It revealed 83 schemes reported excess funding levels, with 20 reporting funding 25% above sustainable levels - up from 14 schemes last year.

Brian Wilson, head of benefits research at Bacon & Woodrow said: "Falling interest rates and increasing longevity are hitting defined benefit pension schemes hard, and low or negative returns on pension fund assets are compounding the problem."