Pensions - Articles - Zombie firms with DB Pension Schemes may have no way out

Further analysis from KPMG UK finds that a fifth of so-called ‘zombie firms’ have defined benefit pension (DB) schemes which could put pension trustees and sponsors in a precarious position.

 Of the circa 21,000 UK private companies that KPMG analysed, up to one in twelve (8%) currently display three of more zombie-like symptoms – companies under sustained financial strain.

 Out of this population KPMG estimates that a fifth (or around 350 companies) will have DB pension schemes. In many of these cases adequately funding the pension scheme and turning round the business is a significant challenge.

 Mike Smedley, Pensions Partner at KPMG said: “It’s clear that DB schemes that are less well-funded and attached to a zombie firm face challenges and will be more susceptible to external risks. Whether it’s change in the economic or political landscape or new regulation, companies and trustees need to avoid sleep walking into further danger.

 “The health of pension schemes and sponsors in these situations are entwined, and there’s a real risk of a prisoner’s dilemma situation of second-guessing what others might do. Trustees, sponsors and their associated stakeholders and regulators need to work together to resolve these situations fairly.”

 David Clarke, Restructuring Pensions Partner at KPMG said: “Zombie firms do pose a risk to the wider economy and difficulty in dealing with a large DB scheme deficit can be a crystallising event for the company.

 “However, even in these difficult situations, there are always options if the parties engage early on in the process. Development of a joint company or trustee strategy will enable the company to take advantage of the flexibilities in the pensions system, whilst protecting scheme members and providing upside for scheme funding over the longer term. Whilst such solutions can be challenging to agree, they protect the company, jobs and members’ pension benefits.”

 Zombie Firms

Back to Index

Similar News to this Story

Hymans Robertson comment on GMP Equalisation call to action
Commenting on the GMP Equalisation Working Group’s initial guidance for good practice in GMP equalisation, Matt Davis, Head of GMP Equalisation at Hym
DC master trusts most appropriate employer pension scheme
New research from Buck has revealed that master trusts are the most suitable defined contribution (DC) pension scheme for nearly 60% of UK employers.
PASA publishes GMP Equalisation call to action
The cross industry GMP Equalisation Working Group (GMPEWG), launched in January, today publishes their ‘Call to Action’. The GMPEWG is chaired by the

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.