EUROPE – Dresdner Kleinwort Wasserstein says the deficit in defined benefit pension schemes in top European companies has declined by 23%.

“We estimate that the deficit fell by 23% since last reported November_2002, (from 279 billion euros to 212 billion euros, as at 31 December 2003),” the firm said in a research note.

“Over the past year we estimate that pension assets have risen by about 15.4% from their last year-end to 31 December 2003.” It said that liabilities have increased on the back of a falling discount rate, with European firms lowering their discount rate assumptions from 6.1% to 5.6% over the last year.

DrKW said that the introduction of new accounting standards next year would put greater focus on liabilities in countries such as Italy and Germany.

“When these regions convert to International Accounting Standards (IAS), their liabilities will come under intense scrutiny. In total, over one-quarter of the 300 largest companies in Europe offer very poor, or no, pension disclosure.” Of the 17 Italian companies studied, 15 did not disclose “meaningful” pension data, DrKW said.

It pointed to Volvo, which disclosed a 2.3 billion-crown rise in pension liability as a result of the new Swedish standard RR29.

DrKW says the UK, Netherlands and Switzerland, with funded plans and higher investment in equities, have benefited most from rising equity markets.

UK telecoms firm BT is the most exposed company to moves in the equities market, DrKW said, due to both the size of its pension assets and equity holdings. German car group DaimlerChrysler was most exposed to the bond market due to the size of its pension liabilities.

The aerospace sector had the largest pension deficits as a percentage of market capitalisation, while the software industry had the lowest. German companies had the largest corporate pension deficits, and Swiss firms the smallest.

The research looked at 260 companies from the FTSE Eurotop 300 index.