The UK's 100 largest listed companies face seeing their defined benefit pension costs double over the next three years unless "drastic action" is taken, according to JLT Employee Benefits.
JLT made the prediction after it found that 52 per cent of the total amount businesses were spending on their employees was going towards DB pension schemes.
Three years ago, the percentage of employee expenses going into DB schemes was just 26 per cent.
From this, JLT estimated that ongoing DB pensions scheme costs of FTSE 100 companies, which now stand at approximately £7bn per annum, could double to £14bn over the next three years.
The firm pointed out that a number of FTSE 100 companies had closed their DB schemes this year - including HSBC, Marks & Spencer, Royal Mail Group, Standard Life and Tesco - and predicted that more would follow.
JLT Employee Benefits director Charles Cowling said the "huge increase in DB pension costs" expected over the next year would force them to take "drastic" action.
"It is difficult to conceive that such a prospect wouldn’t lead the schemes’ sponsors to take some kind of drastic action to mitigate those expenses, particularly as large pension deficits can have a detrimental impact on the company’s financial health and, therefore, its share price and dividend payments," he said.
"As has been seen recently, if a company is in a really bad shape, a large pension deficit could tip it into insolvency. We therefore expect employers to be reviewing any remaining ongoing DB pension provision and monitoring their DB pension deficits very closely.”
In March this year, JLT put the combined FTSE 100 deficit at £87bn. It said only 29 companies disclosed a pension surplus in their most recent annual reports, while 59 companies disclosed pension deficits.
Royal Dutch Shell had the biggest pension liability, at £57bn, while 15 other companies had liabilities of more than £10bn.
