UK - The negative impact pension fund liabilities have on companies is being exaggerated by stock market commentators, a leading investment bank claims.
Commerzbank Securities said investors and commentators are using FRS17 deficits to justify low market ratings, which is encouraging those who “are looking for any excuse to sell”.
The bank’s latest UK market briefing report says that while the risk of pension fund liabilities will put pressure on some company balance sheets, the negative impact on cash-flow has been overstated.
“Companies may need to make extraordinary one-off payments as seen with the GSK announcement.
“However, it is unlikely that actuaries will force the issue by demanding massively increased cash contributions.”
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers