This survey looks at Scandinavian companies, almost all of which are constituents of the OMX Share Index that have UK subsidiary companies with defined benefit (DB) pension schemes. The survey covers 15 Scandinavian companies with around £6.1bn of UK pension liabilities between them.
Our report analyses the contributions paid, levels of deficit and levels of risk within the schemes. Data has been taken from the latest available financial statements of the UK subsidiary companies and their global parent companies, which are as at 31 December 2014 in all cases. Although the companies are not named directly within this survey, they are represented by the same number in each chart throughout.
"In most cases the parent companies in our survey are leading players in their industries and are able to absorb reasonably substantial pension costs."
The costs and risks associated with DB pension schemes are well known within the industry. In most cases the parent companies in our survey are leading players in their industries and are able to absorb reasonably substantial pension costs. However, the impact upon performance and return on investments of the UK subsidiary companies can be more pronounced. Comparisons of these subsidiaries against other UK companies without legacy DB pension liabilities, especially on a cash basis, could be heavily influenced by the pension related costs and cash contributions.
There are also some interesting results, for example that although the average funding level of these schemes is slightly higher than the FTSE350 average, the total contributions paid last year (for past service deficit and current service) represented 2.0% of total UK revenues, versus a corresponding figure of just 0.4% for the FTSE350.
I hope you will find our report both interesting and useful as a benchmark of your UK pension exposure against other Scandinavian-owned companies.