We all know the recession has bought about a considerable amount of salary cuts in the past few months in many firms and financial institutions but the new development seems to have affected the pension schemes at various companies. It has been reported that ‘Nine out of ten’ gold – plated pension schemes are facing closure option. These pension schemes are at risk of being closed down by companies as the deficit level has reached a record high and it expected to increase, these are in accordance with recently released figures.
Majority of firms have confirmed that they do not have sufficient funds and assets to meet their pension obligations and only 9% of companies have reported to be having a surplus. The Pension Protection Fund have released figures which states that the body created to bail – out bankrupt pension schemes has reported a ‘black hole’ of a staggering figure of 219bn pounds. This figure has increased from 191bn pounds a month earlier and 67bn pounds from about a year ago.
This enormous difference caused between the value of the assets which the companies had set aside to pay their pension schemes and the perks they promised the staff is because of the collapse of the global stock market. And the gap is only seems to be increasing and at a quick pace. These benefit schemes churned out by the companies are heavily invested in equities, and the value of these are fast falling. This is causing the firms to find extra funds to get out of the ‘black hole’. But with many firms even failing to survive recession, for them giving pension seems to be a long shot. And many have expressed concern in paying because of a shortfall.
Some professional analysts say that the thing that is scaring the companies most is not only the size deficit but the speed at which it is happening and its unpredictability. This was voiced by an analyst based with Hargeraves Lansdown. Whereas another independent analyst said that the current economic situation gives companies an excuse to do what they would have done anyway.
So one can only hope the markets to react better for these benefit schemes to be carried out
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