The aggregate deficit of U.K. defined benefit pension plans among FTSE 100 companies more than doubled to £300 billion ($491 billion) year to date mid-July from £130 billion, according to consultant Deloitte.
The deficits have hiked cash contributions, which has pinched some companies so much they have begun to use contingent funding or shifting assets to the pension fund from the company's balance sheet. Deloitte predicts the trend will “increase significantly over the next few years,” according to a news release.
“If pension funds had to rely purely on cash contributions from companies, it could, at the current rate, take more than 50 years to clear the aggregate pensions deficit,” David Robbins, Deloitte pensions partner, said in the release. “This position will not be acceptable to pension plan trustees, but significant cash contribution increases would be unaffordable for companies.”
Mr. Robbins also predicted that more large companies will close and freeze their DB plans.