The true pension deficits faced by large European firms are being underestimated, a new report from French research firm AlphaValue has suggested.
According to the research, 430 firms believe that the size of their collective deficits is £267 billion lower than it actually is.
Examples highlighted by the firm included the pension deficit of the Lloyds Banking Group, believed to be almost double official estimates.
Other companies identified by the report include BA and RBS.
AlphaValue said that the shortfalls tend to be caused by the firms being too optimistic about how much they will need to pay out in future.
Variables include future salary increases, inflation rates and employee longevity.
Changes in pension policy caused by high deficits could impact on the retirement incomes of employees over the long term.
Lower pensions could result in retirees looking elsewhere to generate income, with equity release plans potentially seeing an increase in popularity as a result.
Posted by Tom Papworth
