A Bristol-based consulting actuary firm is running the country's first regional pension funding index in the hope that it proves a more accurate gauge of deficits affecting small and medium pension funds, Pension Funds Insider has discovered.

BBS Actuaries has just released the third of a series of quarterly breakdowns of pension funding levels at the 100 biggest companies in the West Country. The combined deficit in the region is £2.6bn according to the latest figures, with Imperial Tobacco having the biggest funding gap in the West of some £842m.

Nationwide building society, based in Swindon, has the second biggest pension deficit in the West of £495m while Western Power Distribution has a shortfall of £380m. Clarks shoes and Westland Helicopters are other major national manufacturers in the top ten with £142m and £115m deficits respectively.

Michael Harvey, an actuary with the firm, told Pension Funds Insider that the regional index gives a more representative picture of funding at small and medium sized firms than many national surveys of pension deficits that may only account for large FTSE 100 or FTSE 250 companies.

Harvey said "What came out of our survey was a mix of funds with big deficits and those with surpluses. There is nothing unusual in this but cutting the data to get away from a national focus that only takes in the largest companies has brought us attention and allows us to monitor trends in our region for our clients."

He continued: "We have schemes here with deficits of around £5 million which is small. Most FTSE 250 companies, apart from those with massive deficits, can deal with it but it is another question for firms that are small or medium sized, maybe up to 1000 employees, as they really have a problem paying off deficits but might be able to succeed eventually."

Finishing on an optimistic note, Harvey said: "a £2.6bn overall deficit can look like a black hole but we would emphasise it is important for companies to have plans in place and capture any upside to de-risk."


Biggest West Country pension deficits:

-Imperial Tobacco £842m
-Nationwide £495m
-Western Power Distribution £380m
-Wincanton Holdings £174m
-C&J Clark £142m
-Zurich Employment £120m
-Westland Helicopters £115m
-Wessex Water £75m
-Cooper Tire £58.9m
-Spirax Sarco £25m

First published: 05.07.2011

dbillingham@wilmington.co.uk