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FT REPORT – FT FUND MANAGEMENT: FTSE 100 pension deficit falls 50%

By Steve Johnson, Financial Times
Published: May 07, 2007

The total pension fund deficit of the UK’s 100 largest listed companies halved to £20bn in the year to March 31, according to research by Pension Capital Strategies, an adviser, and Numis Securities.

However, the true deficit could be nearer £80bn if companies factored in more accurate estimates of future improvements in longevity, the report concluded.

“While the total pension deficit of FTSE 100 companies has improved, we still believe that they are underestimating future life expectancy by two to four years,” said Charles Cowling, managing director of PCS.

The report found 16 blue-chip companies showed pension surpluses in their most recent annual report and accounts, compared with just five at the end of 2006. However, there are huge variations between companies.

While Royal Dutch Shell, the oil company, reported a funding level of 112 per cent, Vedanta Resources, a mining company based in India, was just 27 per cent funded. British Airways, at 27 per cent, had the largest deficit as a proportion of market capitalisation.

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