Pension contributions from FTSE 100 companies fell in 2013 after many years of steady increases, according to the 21st annual Accounting for Pensions report from consultants LCP.
It said that growth in additional security for pensions in the form of guarantees, pledges or charges over assets by FTSE 100 companies partly explains a fall in cash contributions, despite collective deficits of £37 billion in June 2014, a decrease from £43 billion a year earlier. De-risking is also on the rise, with record levels of buy-ins and longevity swap transactions at schemes, such as a £16 billion longevity swap by BT Group. LCP partner and report author, Bob Scott, said: “In some ways the pensions outlook is as bright as it has been for many years. The 2014 budget makes saving for retirement more attractive for individuals. Economic growth brings investment opportunities for pension schemes and their sponsors, and increased capacity in the insurance market shows companies that there is an end in sight to their DB pensions issues.”
In other developments, LCP said that the Scottish independence referendum could cause a problem for some companies, as a “yes” vote could lead to more stringent funding requirements. LCP added that no matter who wins the next general election in 2015, there are likely to be changes to pension taxation.