UK - Beleaguered steel giant Corus will have to increase contributions to its pension schemes, after an estimated £1bn was wiped off their value, analysts predict.
The last valuation by Corus’s actuary, Watson Wyatt, showed the schemes – which have around 44% of their assets in equities – were funded to 112% over liabilities. But analysts argue any surplus has been wiped out by falling markets.
Corus’s contribution rate is currently 2%, but analysts say that this will have to rise to cover any shortfall and that any redundancies will put further pressure on the scheme.
An analyst said: “In the old days, when firms made large numbers of people redundant – as Corus looks set to do – they eased the pain by giving them an extra pension that would come out of the surplus.”
But he added: “How ever big or small that surplus is now, the trustees are going to be less prepared to do that.”
Corus insisted that the analyst was wrong.
A spokesman said: “We have no intention of increasing contributions.
“The schemes are healthy and it is not envisaged that we will have to make any changes.”
This week's edition of Professional Pensions is out now.
Industry Voice: Sponsored by Eaton Vance
BNY Mellon has launched a range of reporting tools to help institutional investor clients track and evaluate portfolio investments based on environmental, social and governance (ESG) issues.
PP speaks to BESTrustees director Heather McGuire about her views on the CMA's review into the investment consultant and fiduciary management markets.