Pensions deficits soar despite rally

5th Aug 2009 11:31

The collective pension deficit of FTSE 100 companies has soared to £96bn, its highest ever, and Footsie would need to climb to over 7,000 to wipe it out, a new survey estimates.Pension consultants Lane Clark & Peacock (LCP) said last month's £96bn deficit is more than double the £41bn deficit in this time in 2008 last year. Two years earlier FTSE 100 firms had a surplus of £12bn in July.LCP's Accounting for Pensions report said the fallout from the collapse of Wall Street giant Lehman Brothers in September 2008 was a key contributor to the recent surge in pension liabilities. FTSE 100 companies which reported in December 2008 revealed losses on pension assets of £42bn from the beginning to the end of 2008. Only three of the top 100 companies - Cadbury, Diageo and Tesco - still offer final salary pension schemes to new members, the report said, adding that more closures of final salary schemes were expected. The report also predicted that the FTSE 100 share index would need to rise to more than 7,000 to wipe out the deficits entirely. Bob Scott, partner at LCP, said that because the outlook for the economy and financial markets remained unclear, pension scheme finances would face more uncertainty. He added: "Those companies which work with their pension scheme trustees to identify and reduce pensions risk will be better placed to weather any future financial storms than those which fail to act."