This rise requires an added injection of £60bn to reach the new funding targets.
Raj Mody, partner at PwC, said in many cases trustees had introduced overly prudent margins into their analysis of how much scheme funding is required, without proper regard for the sponsor’s circumstances.
“Funding negotiations risk being derailed if all parties do not have the right information at their disposal at the outset of the funding process. Employers must play their part in articulating their objectives, commercial position and cash constraints,” Mody stressed.
He encouraged trustees to challenge their own advisers to ensure the funding analysis takes proper account of all relevant factors, including the sponsor covenant.
He added that many sponsors were “running to stand still when it comes to finding cash for the pension scheme”, and that this would only further deter the few remaining companies who continue to support defined benefit schemes.
