FTSE 100 Companies Paying More Towards Their Pension Funds

FTSE100Many of the large companies in Britain have paid 5 times more than they used to pay to their shareholders towards Employee Pension Funds. Lane Clark and Peacock (LCP) which is an institution expertise in pension funds have revealed some data through its in-depth study.

It has reported that 100 FTSE companies have paid shareholders a sum of 71 billion pounds where only 13.3 billion pounds contributes towards the pension schemes.

With the issue of dividend payout has been discussed at lengths in the country, this data submitted by Lane Clark and Peacock will intensify things. 56 companies that are listed on the top 100 companies of FTSE have been shortlisted to create a data in which last year the pension deficit was 42.3 billion pounds and 53 billion pounds was paid to the shareholders during this period.

A high-end retailer by the name BHS which collapsed in 2015 has shown a hollow gap of 571 million pounds in its employee pension funds. Due to market movements, the figure has now risen to 700 million GBP and it clearly depicts that around 22,000 people will see a drop in their pension income. In a similar manner, Tata which is a steel company running in Britain has also projected a deficiency of 700 million pounds towards pension schemes.

A senior partner at Lane Clark and Peacock named Bob Scott who is also the main author of this report have stated:

The collapse of BHS and the potential sale of Tata Steel UK, both with underfunded pension schemes, have highlighted the significance of pension liabilities and the impact that a large defined benefit scheme can have on a UK company.

The senior partner has further added that the FTSE companies will experience pressure on their dividend plan by Pension Regulators because of the collapse of BHS Company. The report further states that BT is ranked 1 out of the 100 FTSE companies when it comes to the deficit with figures close to 8 billion pounds. BT is followed by Tesco and Bae Systems with deficit figures £4.8 billion and £4.5 billion respectively. BP and Royal Dutch Shell come in 4th and 5th with deficits at £4.2 billion and £2.9 billion respectively.

Bond yields are hitting a record-breaking low figure and it has made deficit figure of £935 billion the highest ever in the country. The United Kingdom pension scheme’s liabilities stand at £2.3 trillion at the moment. These figures are revealed by an independent pension consultancy with the name Hymans Robertson.

A partner at Hymans Robertson Patrick Bloomfield has stated that post-Brexit performance will be a deciding factor in the payment of the employees’ pension by the FTSE companies. The former Pensions Minister Ros Altman has said that with the exit of Britain from European Nations, the country will be hit with economic turmoil and will badly affect the pension of employees.

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