Estimated 15 years to get over pension scheme deficits

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Financial Services > Pensions > News

Estimated 15 years to get over pension scheme deficits

Thu, 21 Jul 2005

It would take British companies and estimated 15 years to recover from the deficits caused by their final salary pension schemes.

According to financial services company Deloitte expects many firms might choose to write this deficit off by taking out a big cash business loan and invest it in a pension scheme.

The total pensions deficit is estimated to stand at some £100 billion.

FTSE 100 pension schemes have seen deficits decline to £52 billion from £65 billion at the start of the year. This is attributed to better stock market returns.

More should be done to restore the British public's confidence, believes David Robbins, consulting partner at Deloitte.

"Employees who read stories in the press about pension deficits want reassurance that the benefits in their own scheme are fully funded and secure," he explained.

The report by Deloitte said many companies could gain near-immediate tax relief on pension scheme contributions if they choose to take out lump sum cash business loans to invest in pension schemes.

It commented that by paying off the pensions deficit over 15 years, companies could gain accrued benefits over the time. This is because the tax break is 'accelerated' as the whole pension scheme is being covered.

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