It is a welcome change that defined benefit pension liabilities of employers are now high profile when there are challenges to businesses – for too long pensions liabilities have gone without mention when there is any problem for a business, despite being a major creditor. Frank Field MP and the Work and Pensions Select Committee have pushed pensions to the forefront of business activity, as shown by recent letters demanding that pensions to be protected to, among others, Dixons Carphone. However, pension issues are complex, and in particular the level of liability is in a constant state of flux, relying as it does on various assumptions about future growth, morality, etc. The accounting assessment of the liability is the only public figure, and tells us almost northing about the actual cost, or the changes in cost, of running the scheme. In addition, it is not clear what exactly anyone might expect take the necessary steps to secure the future of the business, so that it can keep paying the reported £46m a year into the scheme – presumably the same steps it would take if it didn’t have pensions to worry about.

Partner Rosalind Connor
Read Rosalind’s comments in City AM and FTAdviser