European firms are sitting on extra 270bn pension deficit
Top European firms are underestimating their pension obligations by €300bn (£270bn), with Royal Bank of Scotland and Lloyds Banking Group among the worst offenders, according to new figures.
Lloyds has underestimated its obligations by €14.2bn, more than any other European firm, followed by RBS, which has unrecognised liabilities of €13.3bn, according to calculations by equity research firm AlphaValue.
AlphaValue said many firms had underestimated their true pension obligations by assuming a low level of wage inflation, and by adopting a high discount rate in calculating the present value of future payouts.
The combined pensions deficit of 430 major listed European firms rose 22 per cent to €280bn last year. AlphaValue said that left an unacknowledged pension obligation of €300bn, equivalent to nine per cent of the shareholders’ equity in the firms.