The extensive pension black hole problem facing the UK's top businesses could be much worse than currently perceived because of an underestimation of the life expectancy of recipients, a new report suggests.
Typical estimations indicate that the pension fund shortfall collectively faced by the FTSE 100 companies is GBP46 billion and that, encouragingly, this figures is being reduced by around GBP7 billion each year.
However, Pension Capital Strategies has suggested that the real burden is over GBP100 billion, more than double the typically quoted figure. This is because, the report’s authors suggest, the life expectancy of recipients has been underestimated and therefore the duration of financial commitment on the part of the employers has been undervalued.
Meanwhile, the report found that, although pension contributions among the UK’s top companies increased in the last financial year, only 8% enjoyed a surplus of funds, leaving 92 FTSE 100 firms facing the problem of shortfalls.