Thursday, June 29, 2006
[IWS] Mercer (UK): Pension Financial Risk--Survey of FTSE 350 Companies [28 June 2006]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Mercer (UK)
Pension financial risk survey of FTSE 350 companies
UK
London, 28 June 2006
http://www.mercerhr.com/pressrelease/details.jhtml/dynamic/idContent/1231860
* 60% of respondents have made special pension contributions in the last year
* Use of derivatives to hedge liabilities has shown limited growth so far
* Over half have increased the longevity assumptions they use to calculate pension liabilities
Last year, 60% of companies made special pension contributions - over and above normal or statutory contributions - to help plug their scheme deficits, according to a survey by Mercer Human Resource Consulting and The Association of Corporate Treasurers. CFOs and treasurers in over 100 companies, most of which were in the FTSE 350, participated in the survey.
The greatest driver for these payments were scheme-specific funding requirements (30%), whereby companies have to top up under-funded schemes to reduce their deficits, and general risk mitigation (25%). Few companies (7%) made special contributions purely to reduce their Pension Protection Fund (PPF) levy or for tax reasons (7%).
Mr Keogh, Worldwide Partner at Mercer, commented: It is interesting that scheme-specific funding was the primary reason why companies made additional pension contributions last year, as the relevant legislation was technically not in effect, but clearly having an influence. This year we are likely to see more companies following suit.
According to the survey, only 12% of companies undertook a specific financing agreement, for example taking out a loan, to fund a special contribution. Nevertheless the finance must have come from somewhere, and the special pension contribution will have been a factor in overall cashflow planning. Borrowing money to fund a pension scheme involves paying back a loan by raising another. There can be tax benefits to doing this, which some companies seem to be taking advantage of, said Mr Keogh.
AND MORE....
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Mercer (UK)
Pension financial risk survey of FTSE 350 companies
UK
London, 28 June 2006
http://www.mercerhr.com/pressrelease/details.jhtml/dynamic/idContent/1231860
* 60% of respondents have made special pension contributions in the last year
* Use of derivatives to hedge liabilities has shown limited growth so far
* Over half have increased the longevity assumptions they use to calculate pension liabilities
Last year, 60% of companies made special pension contributions - over and above normal or statutory contributions - to help plug their scheme deficits, according to a survey by Mercer Human Resource Consulting and The Association of Corporate Treasurers. CFOs and treasurers in over 100 companies, most of which were in the FTSE 350, participated in the survey.
The greatest driver for these payments were scheme-specific funding requirements (30%), whereby companies have to top up under-funded schemes to reduce their deficits, and general risk mitigation (25%). Few companies (7%) made special contributions purely to reduce their Pension Protection Fund (PPF) levy or for tax reasons (7%).
Mr Keogh, Worldwide Partner at Mercer, commented: It is interesting that scheme-specific funding was the primary reason why companies made additional pension contributions last year, as the relevant legislation was technically not in effect, but clearly having an influence. This year we are likely to see more companies following suit.
According to the survey, only 12% of companies undertook a specific financing agreement, for example taking out a loan, to fund a special contribution. Nevertheless the finance must have come from somewhere, and the special pension contribution will have been a factor in overall cashflow planning. Borrowing money to fund a pension scheme involves paying back a loan by raising another. There can be tax benefits to doing this, which some companies seem to be taking advantage of, said Mr Keogh.
AND MORE....
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 6:19 AM
