Company 'ostrich strategy' failing pension scheme deficits

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Companies are only contributing the level minimum required by the minimum funding requirement (MFR) when it comes to paying off pension schemes in deficit.

According to consultancy First Actuarial, such companies should treat these schemes as they would their personal debt, where people pay above the monthly minimum for credit card debt to avoid high rates of interest as well as the time it takes to repay the balance. Director of pension consultants at First Actuarial, Alan Smith says: “Finance directors are likely to be among those who act rationally when dealing with their personal finances, so why on earth do they throw these principles away when it comes to funding their company pension schemes”. He says too many companies only agree...

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