UK - More than two thirds of companies are planning to slash contributions towards final salary pension scheme deficits, Aon Consulting warns.
The Aon200 index revealed deficits were standing at £25bn ($45bn) for August and almost three quarters (71%) of pension schemes were in the red.
It explained the main causes in the deterioration of pension scheme deficits over the year were inflation, rising from 3.35% to 3.9% and equity market falls of nearly 8%.
The research found 67% of companies had planned for their final salary pension contributions to drop next year and the consultant said many would be in for a shock at their next actuarial valuation if they thought they had already done enough to pay off their deficits.
Aon Consulting senior consultant and actuary Marcus Hurd said: "The threat of an impending recession is causing companies to haul in discretionary spends.
"While there is an increasing pressure on companies to contribute more into final salary pension schemes to clear deficits, the harsh realities of the economic climate appear to be setting in."
Hurd explained companies were increasingly looking towards longer term solutions and non-cash security was on the company agenda in an attempt to stave off short term liquidity pressures.
He said: "Given that 71% of pension schemes are in deficit at the current time, the apparent intent to reduce contributions may seem alarming, but cash is not the only solution to pension scheme funding.
"Alternative forms of security, such as group company guarantees, can play a significant role to ease the liquidity burdens of UK plc."
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