Pension disclosures of the FTSE 100 have achieved a £4bn overall surplus for the first time in over five years, according to Pension Capital Strategies (PCS), a pensions risk management and recovery adviser.
FTSE 100 pension schemes recently had £20bn of pension scheme deficits, according to the PCS quarterly report, released in March.
A statement from the PCS says the investment risk in the pension scheme becomes inefficient and costly for shareholders if companies and shareholders do not receive the full benefit of any upside in the pension scheme investment performance.
In many cases it would make sense for companies to lock in recent gains and encourage a significant reduction in risk taking in the pension scheme, the PCS says.
Charles Cowling, managing director of PCS says: "The last few months have seen some astonishing changes in the balances of FTSE100 pension schemes and we are now actually seeing an overall surplus in these schemes. These changes raise a number of important questions that need to be addressed urgently by company boards in order to adjust investment strategies to look after shareholder interests. We believe that for many companies the optimal strategy will now be to encourage pension trustees to lock in recent investment gains in the pension scheme by moving to a much lower risk investment strategy."
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