Investors penalise companies with big pension liabilities even when the schemes are well funded, a report on Monday showed, underpinning the drive of many firms to ditch their obligations to retirees.
Demand to shed those liabilities, or protect against them getting worse, has climbed since the financial crisis because low bond market yields have hit investment returns – and that trend has continued apace in 2014.
Looking at UK blue-chip stocks in the FTSE 100, the study found that when two firms had identical levels of assets in pension schemes relative to company assets, the one with higher pension liabilities tended to have a lower valuation.
The study by consultants Llewellyn Consulting also found that for every 100-pound increase in the reported pension deficit of the companies studied, the value of the firm fell by 160 pounds.
