Pensions burden for UK companies could leap by £1bn
Companies in the UK may have to increase their pension contributions by £1.6bn due to funding shortfalls, according to a survey of 197 pension fund trustees.
Fifty five per cent of the companies surveyed are likely to increase contributions by more than 10%, while 11% are planning to increase contributions in excess of 20%, according to the survey by Engaged Investor magazine and risk management solutions provider Pension Corporation.
The shortfalls in pension funds are due to prolonged market volatility and sharp increases in life expectancy assumptions. Recent increases in pensionable age are an attempt to deal with these demographic problems.
Public and private pension schemes are struggling to deal with changing demographics and an unfavourable financial environment.
On June 17 the UK government announced that the minimum retirement age for public sector employees will rise to 66.
The government wants to reform public sector pensions, meaning a later retirement age of 66 for men and women by 2020.
Upping retirement age has been met with fury by unions. In September of 2010 the French government introduced an increase in pensionable age from 60 to 62 for minimum pensions and from 65 to 67 for full pensions.
These changes were met with huge protests across France with over 2m people taking to the streets in Paris on September 7 2010.