UK - Companies have been warned to expect a demand for more cash from nervous pension trustees as turmoil in the markets worsens.
A study by the firm revealed that the schemes of the UK's top companies were in good shape despite the deteriorating market conditions but warned that the same conditions could force already rattled trustees to call for more funds to shore up the growing perceived deficits.
Pensions partner Mike Smedley said: "We are heading for a 'pensions crunch' as nervous trustees demand more cash from companies just as those companies have less of it."
The study also found that six out of ten FTSE100 companies were paying more into their pension schemes than was actually required to clear the deficits within the ten year time period.
Smedley added: "It's all a question of timing. At a time when cash is plentiful, using it to clear debt can be a very good idea - but as the credit squeeze tightens, financial obligations need to be prioritised.
"And if pensions can be met over a longer time period - that can reduce the demand for cash outgoings today.
"This flexibility ought to improve the long term health of companies which is the pension trustees' primary interest."
Smedley also explained that a sustained fall in the markets would inevitably lead to an increase in assessed pension deficits and increasing mortality assumptions would add further pressure.
He said: "Additional cash pumped in now may make the trustees feel better but in practice will make little difference relative to the impact of market movements and long term company strength.
"Trustees are very long term creditors and need to work with companies to develop a coherent strategy to manage pensions through these turbulent times."
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