French Companies With UK DB Schemes
Andrew Vaughan | 17 May 2018
This survey relates to French companies, almost all of which are constituents of the CAC40 index, which have UK subsidiary companies with defined benefit (DB) pension schemes.
The survey covers 27 French companies with around £45.7bn 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, which are as at 31 December 2016 in most cases.
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: although UK subsidiaries on average produce only 5% of the global revenue, they account for on average 32% and 31% of the global DB liabilities and contributions respectively.