An increasing number of FTSE100 firms are seeking alternatives to straight cash funding, with 38 FTSE100 companies disclosing some form of security arrangements in their 2013 accounts, LCP research finds.
The consultant's Accounting for Pensions report, published today, said these arrangements can provide additional security to the pension scheme while avoiding the risk of a trapped surplus for the employer.
It said ways in which companies provide security vary - with, for instance, International Airlines Group providing its pension schemes with security over aircraft and Whitbread providing security over property.
This comes as the total contributions paid by FTSE100 firms fell by £1.7bn from £21.9bn in 2012 to £20.2bn in 2013.
LCP says this decrease is largely due to a significant reduction in deficit contributions for a small number of companies, such as BT Group, BAE Systems and Barclays, that had made very large contributions in previous years.
It also says this fall reflects the lower value of benefits being provided to employees through defined contribution schemes than were previously provided in DB schemes.
Contributions to DB schemes made up £14.8bn of which around £7.6bn went towards removing deficits rather than to the cost of additional benefit accrual. The highest level of contributions from a FTSE100 firm was from Royal Dutch Shell, which paid £1.649bn during the year.
Most companies paid contributions at a rate greater than the IAS19 value of benefits promised during the year but seven firms - Amec, Barclays, Intertek Group, London Stock Exchange Group, Mondi, Sage Group and Standard Life - paid contributions lower than or equal to the benefits promised during the year.
Of all FTSE100 companies, most expect to pay off deficits within 10 years but 13 are have contributions at such a low rate, they will never pay deficits off unless they increase payments to the scheme.
Jonathan Stapleton analyses the full LCP report in the latest issue of PP (PP Online 6 August)
