The Royal Mail Group, London, had the best-funded pension fund of all FTSE 100 companies as of Dec. 31, at 133%, according to research by JLT Employee Benefits.
The consultant analyzed the funding position of FTSE 100 companies' defined benefit pension funds and found the combined aggregate deficit of these funds has increased by 16% to £57 billion ($96.3 billion) in 2013. The total disclosed pension liabilities of FTSE 100 companies has also increased, by 12% to £534 billion. Seventy companies disclosed pension deficits, JLT said.
The Royal Mail Group's £3.3 billion fund is followed by Prudential PLC's DB plans, amounting to £7.2 billion in assets and 119% funded. Standard Life PLC comes in third, at 116% funded and £2.5 billion in assets.
The majority of the Royal Mail Group's assets and liabilities were transferred to the U.K. government as part of its privatization, which “provided the company with an unanticipated balance sheet gain of over £3 billion,” said Charles Cowling, director, JLT Employee Benefits, in a news release.
JLT predicts more risk transfers among pension funds as they struggle to deal with increased liabilities. “Funding for most FTSE 100 schemes … remains a major issue and 70 schemes still remain below the waterline,” said Mr. Cowling, in the release. “With the move from equities towards bonds continuing overall and the recent budget announcing the possibility of a ban on members transferring out of defined benefit and into a defined contribution pension scheme, we expect those schemes that are in-range to start preparing for buyout.”
Those with larger funding gaps, he said, could use buy-ins to reduce the pressure.
