Are your shares being debited by your pension funds? High deficits can be a red flag for investing – and these are the worst offenders
- Companies with large defined benefit schemes are often on the hook to pay billions out to retirees over time
- Stagecoach, BT and First Group are among the UK companies with the largest pension fund deficits relative to their market capitalization
Company pension funds made headlines again after Topshop and Burton owner Arcadia took over management last week.
Just like a previous retail accident, BHS is a major concern of a large underfunded pension scheme for the many workers who have worked in the chains for decades.
Of course, when a company fails, its pension fund gets into big trouble.
What is less well known is that even in companies that are quite healthy and not about to go bankrupt, a large pension system can be a red flag for investors.