Pensions regulator may block dividend payments

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Companies with high pension deficits may be prevented from paying dividends to shareholders, warns actuarial firm Lane Clark & Peacock (LCP).

In its 12th annual Accounting for Pensions Survey, LCP reported that the combined pensions deficits of FTSE 100 companies totalled 37 billion in July 2005. Despite this, the companies paid out a total of 39 billion in dividends to shareholders during 2004. Nearly half of the companies paid shareholder dividends that were higher than their pension deficits.

But rewarding shareholders at the expense of pension scheme members may be restricted by new regulations, warns the LCP report.

'Those companies with significant FRS17 deficits on their balance sheets may well find themselves restricted in terms of the dividends they are able to pay to shareholders an...

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