The £65 billion pension hit
It has been reported that the top 100 companies in the UK, as denoted by the FTSE 100 index, have lost around £65 billion from the value of their pension assets over the last 12 months. When added to the previous deficit this equates to a shortfall of £135 billion which will at some stage need to be replaced. So how and when will company pension funds recover?
In the past we have seen a number of these major companies across the UK increase their pension fund contributions and make a number of one-off payments to cut the deficit. However, with the UK economy in a dire state and business levels under serious threat there would appear to be little likelihood of these companies making good the shortfall in the short to medium term. This would place yet more pressure on corporate UK at a time when money has never been tighter and prospects are very downbeat to say the least.
Many will look towards Gordon Brown and his tenure as Chancellor of the Exchequer when he reduced and took away a number of tax benefits afforded to UK pension funds. Many believe that this is the underlying reason for the pension problem which the UK is experiencing today.
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