Vodafone came under fire today after it emerged that its corporate pension scheme does not contain sufficient funds to meet the cost of paying off retiring employees.
According to actuaries Bacon & Woodrow (B&W) the mobile giant's pension fund is in deficit to the tune of 12.4 per cent, making it the most under funded of all FTSE 100 top UK companies. The financial consultant found that Vodafone's fund was in breach of statutory minimum funding requirements.
A Vodafone spokesperson said that the company's pension fund had been hit by the recent slump of its own shares which closed yesterday at 136.5p, a plunge of two thirds from this year's high of 399p in March.
The company defended its financial provisions, saying that Vodafone had opted to top up the pension scheme over five years. "We're a young company, so you wouldn't expect us to be fully funded yet," said the spokesperson.
Brian Wilson, head of benefits research at B&W, said: "Falling interest rates and increasing longevity are hitting defined benefit pension schemes hard, and low or negative returns on pension fund assets are compounding the problem."
According to B&W's report, Vodafone, although the worst, is not the only pensions offender. It identified 17 schemes operated by FTSE 100 firms also in deficit, including pension programmes from BT, BAE Systems, Celltech, Tesco, Marks & Spencer and Scottish & Newcastle.
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