We hear much about pension deficits, with companies bleating about how they cannot be afforded, but many of the same companies have taken pension holidays over the years, thereby helping to increase those deficits.
The companies can deal with the deficits, there just needs to be a realignment of priorities. One solution recently mooted has been to switch dividend payments to meeting pension deficits.
Recent research from JLT Employee Benefits found that 53 FTSE 100 companies could clear their defined benefit pension deficits in less than two years by withholding dividends. Only seven companies would need more than two years of dividends to clear the pension deficits. Just six FTSE 100 companies spend more on pension contribution than dividends. Simple really, a case of priorities.