Support for defined benefit (DB) schemes from FTSE 350 companies has stalled and the situation will not improve anytime soon, PricewaterhouseCooper (PwC) has said.

The firm said that recent gains in the stock market and a renewed confidence in the economy are not yet feeding through to more manageable pension deficits.

PwC's pensions support index, which tracks the overall level of support provided to DB schemes in the FTSE 350, now stands at 76 out of a maximum score of 100 – that has increased by 12 points since March 2009, however it has only improved by two points since December 2011.

If a score of over 90 is achieved then this would indicate that companies' legacy DB pension issue are under more control, however PwC said that there are few signs the situation will recover to anywhere near the 88 level achieved pre-recession on the short-term.

Jonathan Land, PwC pensions credit advisory partner, said: "Ignoring the strengths and weaknesses of their company sponsor is leaving some pension schemes vulnerable to risks that impact on both the pension scheme and employer at the same time."

He said that due to the continued uncertainty, companies and The Pensions Regulator (TPR) are considering how to protect their position in the current 'new normal' economic environment, including pension schemes following the regulator's guidance and raking a more integrated approach to risk management.

"TPR's focus on schemes taking a more joined-up approach to investment, funding and covenant will help reduce the risks DB schemes pose to companies," Land said.

Steven Dicker, PwC pensions partner said that pension stakeholders need to proactively look for ways to improve investment performance instead of just simply waiting for improvements to their pension scheme's position.

He said: "Without action defined benefit pension obligations will remain a huge drag on companies' balance sheets and could halt their growth prospects."

First published 10.12.2013

monique_simpson@wilmington.co.uk