COMPANIES are making little progress in reducing the financial burden of their pension obligations as they fail to adapt to the “new normal economy”, analysis conducted by PwC showed.
It found that FTSE 350 companies’ ability to support their defined benefit (DB) pension obligations remained “far below” pre-recession levels.
PwC’s pensions support index, which tracks the overall level of support provided to DB schemes out of a possible score of 100, now stands at 75. This is a one point improvement since June 2012 and far below the 88 level achieved pre-recession in early 2007. The index has been flat since September 2011.
According to PwC, the new economic realities of lower growth, higher inflation and low interest rates have put companies sponsoring DB schemes under “significant financial pressure”.
Mark Jennings, director, PwC Leeds, said: “Stakeholders will have to be more innovative in tackling their pension issues and safeguarding their members’ benefits.”