FTSE100 Company Pension Liabilities Static
11 June 2012 (PLANSPONSOREurope.com) - The average IAS19 funding level remained at 88% for FTSE100 companies with a financial year ending on 31 December 2011, according to research from Barnett Waddingham.
The research also reveals that with bond yields falling significantly over the year, 30 out of 47 companies used a discount rate of either 4.7% p.a. or 4.8% p.a. in 2011, compared with the average 5.4% p.a. in 2010.
Most companies surveyed had a lower percentage of assets invested in equities at the end of 2011 than at the end of 2010, suggesting that many schemes may have taken steps to reduce the risk by moving to safer or alternative asset classes.
Nick Griggs, Head of Corporate Consulting, Barnett Waddingham said: “Significant falls in bond yields and depressed equity values would initially indicate a fall in funding levels, however, these have been offset by lower inflation expectations and significant contributions made by companies over the year.
“The position for some schemes may also have been improved by asset backed contribution arrangements and liability reduction exercises.
“It will be interesting to see whether schemes continue to de-risk in 2012 where they will be buying bonds at much lower yields.”