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Pensions Swamp Footsie Firms
The Mail reports, Pensions swamp Footsie firms:
A
tenth of Britain’s biggest companies are saddled with final salary
pension schemes that dwarf their market value, according to a worrying
report.
Consultancy firm Pension Capital Strategies will
this morning reveal that ten members of the FTSE 100 now have
retirement plans greater than the size of the firm.But for
British Airways, BT and engineer Invensys the situation is more
unsettling still, with their pensions liabilities now more than twice
the market capitalisation of the groups.
The study shows
that the combined deficit on FTSE 100 retirement plans stood at £73bn
at the end of June – a £17bn improvement on last year’s level after a
bounce on the stock market.
The PCS’s report is just the latest to highlight the dire predicament facing some of Britain’s best-known companies as they try to reconcile the rising life expectancy of their workers with increasing turbulence on financial markets.
Actuarial firm LCP last week reported that the total deficit on FTSE 100 pension schemes had reached £51bn by the end of 2009.
Faced
with these gigantic shortfalls on their pension schemes, companies
have been forced to pump in unprecedented sums to ensure they have
enough to pay employees in retirement.
These
emergency ‘deficit contribution’ payments tripled from £4bn to £11.8bn
last year, according to PCS.Oil giant Royal Dutch Shell led the way with
a £2.7bn emergency top-up payment, said the PCS, while Lloyds Banking
Group, Royal Bank of Scotland and Unilever all funnelled more than £1bn
extra into their final salary pension schemes.
Companies are resorting to increasingly novel methods to plug pension deficits. Drinks giant Diageo has put whisky stocks into its scheme, while Tesco, Sainsbury’s and Whitbread have all pledged property assets to their retirees.
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If their pensions go away, they will replace the government in the next election. The new government will take the rich people's money (my money) and use it to make up the difference.
Doesn't work so well when you only get to choose between the Banker Party and the Other Banker Party.
Nah. The next government will be exactly like the prior one, and do nothing as soon as the campaign to be elected is over.
I would estimate that probably at least two-thirds of the workers in the UK are purely working for their pension. Clocking in and clocking out every day, enslaved until the day they can retire and live off this magic pot of money. The bank employees, the entire public sector, and most apparatchiks in the corporate world, all they really care about is the pension value.
Unfortunately for most of them, the pot of gold will be gone when they look to find it.
Meantime, until they realise there is no job-security any more in UK, productivity is going to continue to drift downwards.
Rude awakening coming for UK workforce, what if they don't complain?
After a 40 year carreer and al I got was a empty pot with no gold at the end of the rainbow :)
Priceless :)
So thats UK commercial property fucked then.
The problem is that in the UK it is against the law to cut current benefits, no matter how bad your financial position - therefore all these companies are gambling heavily on equities coming good.
When the human laws of state go to battle against the universal laws of math I know which pony my money is on.
What cannot happen, will not happen.
Alot of pensioners are going to find out what it felt like to be a "invester" with Bernie Madoff when his Ponzi went bust.
Leo, I keep telling you the math dictates benefit cuts are the only logical outcome. You keep disagreeing, and yet supply me with daily articles as above that argue for my case. Thank you.
Yep, cramdowns are what has to happen in the private pension system. Else, they take their chances in bankruptcy court.
Same for public pensions, unless state law dictates that taxes have to be raised to make up the shortfall. I would expect a diaspora from states that did this.
One thing that is clear: the federal government absolutely must be prevented from funding state pensions.
I totally agree with you, cuts to benefits future and present will happen and not just in the UK. It will also happen in the US, the public and federal pensions are alot worse and thats not including the SS, Medicare etc.. Why do you think that at least in the US the Martial Law provisions where fought for so much. It's because they know that when the finally say that they will cut benefits across the board by 30 to 40 percent, people will riot and go crazy.