Multinationals’ pension deficits up 6.6 pct – LCP

* Axa, Boeing, Daimler face largest pension deficit

* UK longevity assumption more conservative than Europe

LONDON, Dec 1 (BestGrowthStock) – The pension deficit of the world’s
largest 100 multinationals grew by 10 billion euros in the first
nine months of 2010 as rising obligations outstripped record
contributions and rallying equity markets, consultant LCP said.

The total deficit of the FTSE Global 100 constituents stood
at 160 billion euros ($208 billion) at the end of September
2010, compared with 150 billion euros at the end of last year,
even though companies ploughed “a record 40 billion euros” into
their corporate pension plans to bring them back into surplus.

LCP said the situation could worsen, estimating a 10 percent
chance the aggregate pension deficit would grow by at least a
further 100 billion euros during 2011.

Multinational pension deficits remain high because of
falling corporate bond yields, which are used to discount the
value of future pension payments.

Pension funds discount future payments against the yields of
a high quality corporate bond. If the yield in question is 5
percent, they assume that payments needed in a year’s time are
worth 5 percent less in today’s money.

Axa (AXAF.PA: ), Boeing (BA.N: ) and Daimler (DAIGn.DE: ) run the
highest pension deficits, which accounted for 18 percent, 16
percent and 15 percent of their equity market capitalisation,

LCP’s European Pensions Briefing 2010 also noted that while
the UK population has only average life expectancy among
industrialised nations, companies typically assume that their UK
employees will outlive other nationalities, pushing their
pension schemes’ liabilities up.

LCP said the disparity raised questions about whether
companies were being overly prudent in the UK or not considering
the full ramifications of demographic change in other countries.

UK-based employees retiring today are expected to live to 87
years, compared with 84 years for both U.S. and German-based
retirees, company disclosures showed.
($1=.7676 Euro)
(Reporting by Cecilia Valente, Editing by Sinead Cruise and
Will Waterman)

Multinationals’ pension deficits up 6.6 pct – LCP