EUROPE - Standard & Poor's Ratings Services says that many top European companies are still not consistently disclosing their assumptions on future increases in pensionable earnings.
The projected benefit obligation (PBO) identifies the effect of future compensation increases on already-earned benefit payouts.
In addition, too many companies still do not disclose other actuarial assumptions, pension fund breakdown by asset classes, or non-pension obligations.
Companies that regularly disclose assumptions do seem to be slightly more conservative at year-end 2002 compared with year-end 2001, however.
A surprising number of blue chip credits, particularly in Continental Europe, do not clearly report projected benefit obligations, said Emmanuel Dubois-Pelerin, credit analyst and director of S&P's corporate ratings, Europe.
Nevertheless, the most glaring omission is that of actuarial assumptions and the lack of pension information with respect to merger and acquisitions activity.
The findings from the Standard & Poor's 2003 European Pensions Survey covered about one-half of the 500 rated European corporates that had published full accounts by end April 2003.
It also found that at year-end 2002, less than one company in 10 remained in surplus with the aggregate surplus exceeding e6bn (US$6.3bn), compared with one in six and e14bn, respectively at year-end 2001.
Over 25% of those companies surveyed posted a deficit of more than e1bn, compared with one in five in 2001, while one-half continued to post surpluses or deficits below e250m.
Standard & Poor’s would not disclose the companies during press time.
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