FTSE 350 pensions support highest for 10 years

FTSE 350 companies’ ability to support their defined benefit (DB) pension obligations has returned to pre-recession levels after a decade, with pension scheme covenant strength at the end of 2017 now at the same level as 2007, PwC analysis shows

PwC’s pension support index tracks the relationship between the financial strength of the FTSE 350 companies and the size of DB pension scheme commitments, rating the overall level of employer support offered to these schemes. This year’s score of 87 has improved and is now only 1 point lower than the previous high of 88, which was achieved pre-recession.

However, the gap between those companies that are doing well and those that are struggling continues to increase. PwC warns there are still significant challenges on the horizon including Brexit, economic uncertainty and increased regulation.

Jonathon Land, head of PwC’s pensions credit advisory practice, said: ‘This year’s index score has increased compared to last year due to improved company performance and better returns on investment for schemes. Whilst this brings the index back to the level it was ten years ago, it masks the fact that over this time there have been many winners and losers within the FTSE 350.

‘Certain sectors, in particular retail, have been impacted by the growth in online sales, increased economic instability and uncertainty surrounding Brexit. At the same time, regulation is set to change and the demands placed by the Pensions Regulator on trustees and sponsors are set to increase.’

Report by Pat Sweet

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