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Pension deficits for FTSE Global 100 companies jump to €160bn

GLOBAL - Companies in the FTSE Global 100 have seen their pension deficits rise to €160bn, an increase of 7%, according to a survey by LCP.

In the LCP European Pensions Briefing 2010, the consultancy also estimated that Royal Dutch Shell held the biggest liabilities of any European multinational, with close to €44bn in 2009, only beaten by IBM, with €62.5bn in pension liabilities.

LCP said pension scheme assets had only risen by €30bn over the course of the year - insufficient to offset a €40bn increase in liabilities across the board. This was despite contributions totaling €40bn.

The report adds: “Despite this large cash injection, the combined disclosed deficits of these companies increased by around €10bn over 2009. The rise in liabilities was largely due to a fall in corporate bond yields, the measure used to value pension liabilities for accounting purposes.”

LCP noted an increase in contributions made to defined contribution schemes, saying that payments to such pension plans were up by 8% compared with the previous year.

It also highlighted aircraft manufacturer Boeing as having the highest liabilities relative to market capitalisation, with the former outstripping the latter by 132%.

Of the countries and regions represented in the FTSE Global 100, Germany possessed by far the worst liability to market cap ratio, standing at 32% across the half dozen companies featured.

The Netherlands, with three entries, offered a ratio of 27%, with the UK at 16% and Switzerland marginally better with 15%, contributing 14 and five companies to the list, respectively.

The US and Canada, which accounted for almost half of the companies examined, were above average, with liabilities only accounting for 11% of the firms’ total market value.

The remaining EU countries unmentioned were home to eight listed companies, with a liabilities to market cap ratio in line with the average at 14%.

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