Blue-chip companies battered by pension storm

Blue-chip companies in the UK are now using £2 out of every £3 in pension scheme premiums to reduce their liabilities as opposed to investing in employee benefits for the future. A report by KPMG indicates that overall there has been a £15 billion increase in pension fund liabilities for FTSE 100 companies during 2010 so far. The figure now stands at £65 billion which is an enormous 50% increase since 2008.

While the figures on the surface are very demanding and very damaging for the UK economy and the UK pension fund industry, we need to remember that we are currently going through one of the longest and most difficult economic downturns in living history. In the good times there is no doubt that companies will be able to increase their pension fund contributions in order to alleviate some of the extended liabilities although at this moment in time many are more focused upon keeping their businesses afloat.

While the UK pension fund industry has undergone major changes over the last 10 years there is no doubt that moves by the current coalition government and the previous Labour government will increase pension fund investments well into the future. Younger workers of today will definitely be in need of their own pension fund income in years to come as the state pension comes under more pressure.