IRELAND - The 30 largest publicly traded companies in Ireland reduced their pension deficits by €2bn ($2.7bn) in 2010 to €24bn after at least half made changes to promised pension benefits but average deficits continue to outpace market capitalisations, a report by LCP Ireland finds.
LCP said in some cases, companies have implemented significant benefit reductions to bring down costs. However, pension funding is still in the red, with the average deficit running at 17% of market capitalisation.
The consultancy also found that the market capitalisation of the three largest Irish banks - Allied Irish Bank, Bank of Ireland and Irish Life and Permanent - "is so dwarfed by their pension liabilities that it will inevitably be a significant factor for any planned corporate transactions such as mergers, take-overs, acquisitions and planned growth".
The firm said AIB's pension liabilities stood at more than 12 times its market capitalisation at the end of 2010.
Meanwhile, contributions paid in 2010 are on average 2.8 times the cost of the year's pension accruals.
Conor Daly, partner at LCP Ireland said: "The report shows that the scale of pension liabilities continues to pose a significant challenge for many of Ireland's top companies. Contributions remain at very high levels despite the economic downturn. However, it is also clear that an increasing number of companies are seeking to share the burden of meeting these liabilities with the membership through various forms of benefit reductions. This is a trend we expect to see continue."
This week's edition of Professional Pensions is out now.
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