Pension liabilities hitting profitability at UK corporates, says SEI survey
A survey reveals that pension schemes are having an adverse affect on 52% of UK companies, negatively impacting profitability, financial health and the ability to invest in new projects. The survey by SEI Investments, a provider of investment and technology solutions, is its 8th survey among pension funds globally.
When asked to identify which areas were taking the hit, 71% of the CFOs, CEOs and senior financial officers surveyed said profitability was being affected while almost a third said their pensions liabilities had caused a reduction in both their share price and dividend payouts. Shoring up pensions deficits has also resulted in reduced investment in new initiatives, as reported by 19%, while 16% said it was resulting in cash flow problems.
To counter these and future problems, 86% of the sample are either adjusting or considering adjusting their investment strategy and 82% are either increasing or considering an increase to their pension contributions. A third have already converted to DC schemes and a quarter have or are considering switching to a different type of defined benefit scheme. Furthermore, 8% have already reduced benefits and the same percentage is giving consideration to doing so in the future.