The combined pension deficit of Britain’s FTSE 100 companies dropped by almost two thirds in 2010, from £51bn (€58.2bn) in 2009 to £19bn.
The figures came to light in the 18th annual Accounting for Pensions report by LCP, the actuarial consultancy.
A number of reasons for the decline were cited, including the change in the inflation measure from RPI to CPI, continued high contributions from employers and stable economic conditions.
However, while the move to using CPI has benefited companies by reducing their liabilities, it poses a threat to the value of many employees’ pensions, with LCP saying that the “small print lottery” of each scheme’s different wording could see some pensions unaffected and others potentially reduced in value by around a quarter.
Bob Scott, senior partner at LCP, said: “The last twelve months have been a relatively benign period for pension schemes but it would be a mistake to think that the pensions challenge has gone away.
“FTSE 100 companies still have about £400bn of UK IAS19 pension liabilities and the challenge remains not only to ensure that members receive what they were promised but to find ways to provide today’s young employees with decent pensions as final salary schemes decline.”
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