FTSE 100 pension scheme assets fell by GBP65bn in 2008

The credit crunch wiped £65bn off the value of pension scheme assets of the UK’s largest 100 companies in 2008 according to Deloitte.

The business advisory firm estimated that FTSE 100 pensions schemes were in deficit by £130bn at the close of 2008, and warned that problems could deepen in a recession.

Employer contributions helped boost funding levels by around £13bn, however Deloitte said the crash in asset values in 2008 is equivalent to five years’ worth of the companies’ current pensions contributions.

David Robbins, pensions partner at Deloitte, said: “In the current environment, it is crucial that companies look to proactively manage their pension schemes, just like the other aspects of their business operations.”

The firm also raised concerns that a recession would have serious implications for pension scheme funding. Low economic growth depresses asset prices and also cuts in interest rates push up prices of government bonds and therefor pension scheme liabilities.

Robbins warned that pension scheme trustees would be likely to ask employers for more cash to plug increasing deficits.

“Management should engage with trustees to reach an acceptable agreement on cash contributions which takes into account the level of contributions the company can reasonable afford,” he said.