UK - The total deficit of FTSE100 pension schemes has improved £44bn in the last year, but deficits could be underestimated by £40m, according to Pension Capital Strategies' (PCS) quarterly report.
The total deficit of FTSE100 pension schemes at 30 September 2007 was an estimated £2bn.
Charles Cowling, managing director of PCS said there was increasing evidence of FTSE 100 pension schemes reducing the mismatching of pension assets to liabilities by reducing equity holdings and increasing bond allocations.
“Ten FTSE 100 companies reveal that they have increased bond allocation by more than 10% over the period since their previous accounts,” said Cowling.
However, Cowling said while deficits seemed to be improving on paper, PCS believed that FTSE100 companies were continuing to underestimate future life expectancy by about one to three years, meaning that the total pension deficit could be understated by as much as £40m.
Cowling said: “Companies need to take a more detailed look at the life expectancy figures that they are applying to their pension scheme to avoid future problems."
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