Pensions Regulator statement to employers – PwC data and response

Published at 10:14 AM on 18 February 2009


  • 69% of FTSE100 companies concerned about pension impact on dividends
  • PwC urges employers to be assertive in helping pension trustees understand cash constraints

The Pensions Regulator has issued guidance this morning to employers regarding supporting their defined benefit pension schemes during the downturn.

The latest PwC Pensions Survey of 98 organisations (including 29 FTSE100) shows 81% of all companies are concerned about levels of pension cash funding commitments and 69% of FTSE100 companies are worried about the impact on dividends to shareholders.

Marc Hommel, partner and UK pensions leader, PricewaterhouseCoopers LLP, commented:

"Employers need to be far more assertive in helping trustees understand cash constraints. Trustees tend to ask for more than is affordable when the employer has not engaged them early or openly enough. The greatest security for a pension scheme is a strong and viable employer, and a number of mechanisms are available to enable employers to reduce cash commitments to pension schemes while maintaining security for trustees and their members. These include contingent assets, parental guarantees, and back-end loaded or profit-related funding plans. Failure to tackle these issues and opportunities will undoubtedly impact dividends and the overall ability of companies to renegotiate debt facilities."

PwC Pensions Survey data

Funding concerns

81% of survey respondents are concerned about the impact on their company’s cashflows of cash funding commitments to their UK pension scheme

45% are worried about potential impact on their ability to pay dividends

Of the 29 FTSE 100 companies surveyed, these figures rise to 86% and 69%, respectively.

Across all respondents, 86% are also concerned about their company’s lack of control or influence on their cash funding commitments.

The Pensions Regulator’s stance on scheme funding prudence is a concern for 81% of companies surveyed.

Scheme funding negotiations

On the subject of what they want to change about their next scheme funding negotiations with the pension scheme trustees:

Approximately a third of companies (32%) state they want to change the extent to which they control the process

Over a third (38%) plan to use their advisers differently

40% perceive the way they manage their trustees’ perception of their employer covenant as an issue

Almost half (45%) will be more explicit with the trustees about the sponsoring company’s objectives and constraints.

 

ENDS

 


Notes to Editors:

1. The Pensions Regulator announcement is available at: http://www.thepensionsregulator.gov.uk/mediaCentre/pressReleases/pn09-02.aspx 


For more information contact:

Marc Hommel
Partner, PricewaterhouseCoopers LLP 
Tel:+44 (0)20 7804 6936 
Mobile:+44 (0)7801 767373 
 

Lydia Ruffles
Financial Services, PR Manager, PwC 
Tel:+44 (0)20 7212 1798 
Mobile:07966 319 780 

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