Top firms' £5bn pension surplus

BRITAIN'S largest companies boast a massive £5bn pension surplus, according to research which shows that the controversial new accounting rules have been much less savage than expected.

Of the 47 FTSE 100 companies to have published accounts under the FRS17 standard, 25 are showing a surplus and 22 a deficit, say actuaries Lane Clark & Peacock. The aggregate position was a £5bn surplus, with BP Amoco, Unilever and BAA among the blue-chips showing surpluses.

'From all the recent headlines about FRS17, you'd think that it was going to be a £10bn deficit,' said Lane Clark's Alex Waite. 'A lot of pension schemes are in fact very comfortable.' Some companies were using FRS17 as 'a convenient scapegoat' to axe generous final-salary schemes, he said.

But the new rule has exposed large deficits at some companies including HSBC (£837m), BAE Systems (£650m) and AstraZeneca (£407m). In percentage terms, the most underfunded were Compass at 30% and HSBC at 12%.

The survey also reveals a wide spread of assumptions about future investment returns. P&O Princess Cruises, Hays and Diageo make the most optimistic assumptions, while Compass and Reed International are the most prudent.