The U.K.'s largest companies reduced their pension fund contributions in 2014, shows a new report from consultant Lane Clark & Peacock.
FTSE 100 firms made a total £12.5 billion ($19.4 billion) in contributions to their defined benefit plans last year, a decrease of 15.5% vs. contributions in 2013.
In its 22nd annual LCP Accounting for Pensions report, the consultant analyzed 87 FTSE 100 companies' pension funds.
LCP said the drop is in part attributable to a number of large, one-off contributions that were made in 2013, or in previous years.
However, pension funds of FTSE 100 companies continue to pose significant financial risks to their sponsoring employers, LCP said. Of the firms analyzed, 10 had combined pension fund liabilities of almost £350 billion, and 10 companies had combined deficits of almost £40 billion.
There is a 10% chance that those deficits could increase by at least £25 billion over the next 12 months, said LCP. FTSE 100 pension funds analyzed by LCP had £528 million of assets and £553 billion of liabilities, giving a total deficit of £25 billion, and funded status of 95.5%.
The average FTSE 100 pension liability represented 35% of company market capitalization, down slightly from 36% in 2013. On average, pension fund deficits were 5% of market capitalization, up from 4% a year earlier.
Of the 87 companies, 24 said they had pension assets equal to or larger than their liabilities, up from 21 companies last year.
