Report underlines imbalance in FTSE 100 dividends and DB pension schemes

FTSE 100 companies paid out seven times more in dividends than they made in contributions to defined benefit (DB) pension schemes last year, according to a new report.

The Accounting for Pensions 2019 report from consultancy LCP estimates that FTSE 100 companies handed out dividends of £90 billion to shareholders in 2018. In comparison, it’s estimated the same companies made pensions contributions of just £13 billion during the year.

LCP partner and the report’s lead author Phil Cuddeford said: “Companies should be proactive in implementing long-term strategies if they are to meet the incoming regulatory requirements in the updated DB funding code, due to be consulted on later this year.”

This comes as The Pensions Regulator (TPR) is putting increasing pressure on DB scheme sponsors in the UK to address the balance of dividend payments and deficit reduction contributions.

Speaking to IPE, a spokesperson for TPR said the regulator is being clearer about its expectations.

“Trustees who are undertaking their triennial valuations should negotiate robustly with their employer to secure a fair deal for the pension scheme,” they said.