Pensions ‘threaten’ employers’ survival
Some companies find their pension obligations so onerous that they are ’threatening’, and they might face bankruptcy if they were to improve the status of their pension fund, a report has warned.
The warning has come from the Pensions Regulator and the Pension Protection Fund (PPF), which have published their first survey of pension fund finances.
The survey shows that 58% of defined benefit schemes (where pensioners get a proportion of their final salary in retirement) are now closed to new members and 3% have closed completely. The survey sample consisted of 5,722 such schemes, extant at 31st March 2006, with over 12.5 million active, deferred and retired members.
Chairman of the Pensions Regulator, David Norgrove, said: “There is a significant minority of pension schemes where resourcing their pension fund adequately is a very difficult issue and, for some, it is life-threatening.”
Most of the pension schemes surveyed – 83% of them – had a deficit of some description, coming to £76bn, but 17% actually had a surplus, totalling £43bn, a situation that the chairman of the PPF, Lawrence Churchill, found “uneven”.
It was also agreed that more people required pension advice in today’s changed pensions environment.