Scandinavian companies with UK DB schemes

This survey relates to constituent companies of the Scandinavian OMX Share Index that have UK subsidiary companies that participate in defined benefit (DB) pension schemes. The survey covers 18 Scandinavian companies with an aggregate of around £5.9 billion of UK pension liabilities between them.

Our report analyses the contributions paid, levels of deficit and levels of risk within the pension arrangements. We have also analysed the potential impact of the weakening of Sterling in the wake of the EU referendum result. 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 2015 in all cases. Although the companies are not named directly within this survey, they are represented by the same number in each chart throughout.

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.

The results show that although the average funding level of these schemes on the accounting basis is slightly higher than the FTSE350 average, UK subsidiaries are paying a higher proportion of their revenues as deficit contributions than FTSE350 companies (1.8% compared to 0.9%).

I hope you will find our report both interesting and useful as a benchmark of your UK pension exposure against other Scandinavian-owned companies.

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