$163 billion pension deficit faced by largest firms in the U.K. could disappear by the end of the year
The massive pension deficit some of the biggest companies in the United Kingdom are facing could be wiped out by the end of this year, according to new research.
Aon Consulting said the firms making up the Financial Times Stock Exchange (FTSE-100) collectively faced a pension shortfall of $163 billion Cdn at the end of 2003.
But that could be reduced by more than a third by the end of 2004 if the FTSE-100 index continues to rise and the yield on corporate bonds also improved.
If the FTSE, known as the “Footsie”, ended the year at 4,725 points and yields on bonds rose to 5.9 per cent, the pension deficit would fall to $100 billion. Both those figures are inline with forecasts from leading U.K. investment banks, according to a report in the Edinburgh Evening News.
The deficit could disappear almost completely if the bond yield rose to 6.5 per cent by the end of December and the Footsie rose to 4,725 — figures that are on the high-end of experts’ predictions.
Aon said the shortfall could also be wiped out if the market hit 5,600 by the end of the year or if the corporate bond yields increased to 6.3 per cent and the Footsie rose to 5,000.
Aon Consulting said the firms making up the Financial Times Stock Exchange (FTSE-100) collectively faced a pension shortfall of $163 billion Cdn at the end of 2003.
But that could be reduced by more than a third by the end of 2004 if the FTSE-100 index continues to rise and the yield on corporate bonds also improved.
If the FTSE, known as the “Footsie”, ended the year at 4,725 points and yields on bonds rose to 5.9 per cent, the pension deficit would fall to $100 billion. Both those figures are inline with forecasts from leading U.K. investment banks, according to a report in the Edinburgh Evening News.
The deficit could disappear almost completely if the bond yield rose to 6.5 per cent by the end of December and the Footsie rose to 4,725 — figures that are on the high-end of experts’ predictions.
Aon said the shortfall could also be wiped out if the market hit 5,600 by the end of the year or if the corporate bond yields increased to 6.3 per cent and the Footsie rose to 5,000.
