Sections

European firms pay more into UK DB schemes

Related Categories

European-headquartered companies are on track to close the deficits of their UK pension funds sooner than their British counterparts, according to Barnett Waddingham.

Continental companies are paying an average of £5,700 (€6,682) per employee into schemes they sponsor in the UK, the consultancy firm found, versus £2,400 on average for FTSE350-listed companies.

This meant European firms could close their accounting deficits “in about six years”, Barnett Waddingham said, “nearly a year ahead of the FTSE350”. This is despite the cost of operating defined benefit (DB) schemes making up a greater proportion of total staff costs for European companies.

“While UK subsidiaries only contribute 6% of global revenue, they account for 30% of global DB pension obligations,” Barnett Waddingham added. 

The consultancy firm analysed 75 UK-based DB schemes attached to companies located in Denmark, France, Italy, Germany, the Netherlands, Norway, Spain, and Sweden. The schemes had aggregated liabilities of more than £100bn (€117.3bn), based on data up to 31 December 2015. 

Andrew Vaughan, partner at Barnett Waddingham, said: “These figures raise an interesting question as to why are European companies with UK final salary pensions paying proportionately more than their UK counterparts to fund deficits?

“One possible explanation is that European headquartered companies have tended to adopt a more cautious approach globally to managing their pension obligations. It will be interesting to see how this pans out post-Brexit.”

In 2015, the 75 companies contributed £1.6bn in total to their UK schemes, broken down as follows:

 
 Country 2015 contributions
 Netherlands £99m
 France £479m
 Germany £399m
 Spain and Italy £530m
 Scandinavia £117m

 

 

 

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2467

    Asset class: Search for a broker (mainly ETFs).
    Asset region: Global.
    Size: 250m.
    Closing date: 2018-08-28.

  • DS-2468

    Closing date: 2018-08-24.

Begin Your Search Here