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Barnett Waddingham
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FTSE350 oil and gas sector deficits contributions at their lowest in seven years but this may not last for long

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Research from Barnett Waddingham, the UK’s largest independent provider of actuarial, administration and consultancy services, reveals that oil and gas companies in the FTSE350 are paying less in deficit contributions than they have for the last seven years.

Barnett Waddingham’s annual research on FTSE350 companies highlights the impact defined benefit (DB) - or final salary - pension schemes are having on UK businesses.  The key findings specific to the oil and gas sector include:

The oil and gas sector has had a tough time recently with falls in profits across the FTSE350 and it is unsurprising to see reductions in deficit contributions.
  • this sector saw the biggest decrease in disclosed accounting deficits than any other sector in 2015 - aggregate deficits decreased by over £7 billion from 2014 
  • deficit contributions are at their lowest levels since the beginning of our survey at around £400 million in 2015
  • deficit contributions as a proportion of dividends is the lowest of all sectors at 2%
  • in 2015, this is the only sector where there were no companies paying more than their free cashflow towards deficit contributions
  • the aggregate amount paid towards reducing DB deficits in 2015 represented 14 pence for every £1 spent on pension provision.

Mike Kennedy, head of oil and gas - pensions at Barnett Waddingham, commented:

“Whilst deficit contributions for the sector have fallen to the lowest level since our research began in 2009 they still represent a significant cost for FTSE350 companies.

“The oil and gas sector has had a tough time recently with falls in profits across the FTSE350 and it is unsurprising to see reductions in deficit contributions. This volatility is set to continue – especially with the added uncertainty of Brexit.  The future funding needed to meet DB pension obligations is another unwelcome area of uncertainty magnified by the vote to leave the EU.

“FTSE350 companies play an important part in supporting their former employees in their retirement with payments of over £20bn being made to pensioners in 2015. A significant amount when compared to the c£90bn paid by the Government in State Pensions.”

For more information please contact:

Steph Admans, PR Manager, Barnett Waddingham, 01494 788112, steph.admans@barnett-waddingham.co.uk or

Maxine Curtis, PR Executive, Barnett Waddingham, 01494 788198, maxine.curtis@barnett-waddingham.co.uk

Press Release PDF
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