PricewaterhouseCoopers Analysis on Asset-based Solutions

Lucas Gilmore, “Big 4″ observer
September 02, 2010 /

PwC analysis reveals that approximately one-fifth of 100 FTSE companies are working towards covering the pension deficits by contributing some assets to cover the lag. Various companies are adopting different approaches to meet the pension deficit but the most common method is to directly fund the pension scheme or to have some sort of security which may be used at a later period.  Some companies have also been reported to have kept some of their assets aside especially to be used for pension schemes so that they do not have to face any major deficits in the future.

In the analysis given by PwC it is stated that most of the companies are shifting their attention from cash to assets for financing the pension schemes. Earlier, cash was used to fund the pension schemes but the current trend is to meet the pension scheme requirements through asset deals. From what the figures reveal, there has been a marked increase in the amount contributed via asset deals. It has risen remarkably from 8 billion pounds last year to 12 billion pounds in 2010. It is projected to touch a 10 billion pound mark in the year 2011 where as cash contributions are expected to fall below a 10 billion pound mark.

According to Raj Mody of PwC, this transition from cash to asset contribution reflects that corporate liquidity is still to improve and companies are trying to meet their deficit prudently. The pensions schemes’ regulators have asked the companies to buckle up and find some another alternatives to meet the deficit and if possible to maintain a surplus. It is a challenge for the companies and now the ball is in their court with immediate problem of deficit funding being resolved.


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