UK - Top-ups to meet final salary scheme commitments have shaved billions of pounds off company profits, official figures reveal.
New Office of National Statistics figures show that poor market performance has forced companies to increase contributions to final salary schemes to keep apace with pension fund commitments.
The figures show that companies invested 7.8% of profits in their pension funds for the first quarter of 2003 – the highest level since 1986.
ONS said while company profits rose 7.4% to £60.8bn they would have jumped 9.5% without the extra contributions profits.
Contributions to pension schemes have risen by 73% since 2001.Mercer HR Consulting senior researcher Deborah Cooper said it was likely the increases were just the beginning of a trend.
She said: “The deficits are so huge, they are not going to fall away overnight. Employers will be hoping to spread contributions out.
“The difficulty is for those companies which still have schemes open – the cost of accruals is growing because of increased longevity and low interest rates and inflation.
“Just to standstill they have to increase contributions and then they have the deficit for past service as well.”
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