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FTSE 100 pension liabilities may rise by £2.5 billion


Deloitte survey shows companies are worried about EU proposals

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The pension scheme liabilities of the FTSE100 could increase by as much as £2.5 billion because of stricter European Union capital rules, a Deloitte survey showed on Monday.

Three quarters of the FTSE 100 said the proposals, based on the Solvency II regime for insurers, would boost their gross liabilities by between 20 and 50 percent. This translates to an increase of between £1 billion and £2.5 billion each.

"Almost without exception, respondents are critical of the proposals," said Feargus Mitchell, head of Deloitte's actuarial and pension services practice.

"They believe that given the current climate, when pension deficits are already high and the economic outlook is uncertain, now is not the time to introduce new obligations that will incur further expenses and increase deficits."

The draft capital rules for the pensions industry could impose greater financial obligations on retirement schemes and force them to hold higher quality assets.

European internal market commissioner Michel Barnier, who is in charge of the overhaul, said earlier this month that Solvency II, widely expected to ratchet up capital requirements for insurers, won't be "copied and pasted" onto the pensions industry.

On Friday, British telecoms firm BT agreed to pay down a £4.1 billion deficit in its staff pension fund more quickly than originally planned.

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FTSE 100 pension liabilities may rise by £2.5 billion
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