A declining stock market and higher-than-expected inflation pushed pensions at U.K. companies back into the red in June, according to Watson Wyatt.
At the end of May, FTSE100 companies’ pension funds had an aggregate surplus of £23 billion (C$46.5 billion) under the FRS17 accounting standard. However, during June, this turned into a deficit of £8 billion (C$16.2 billion).
“Falling share prices and news that inflation has broken through the Bank of England’s target has come at a bad time for finance directors preparing half-yearly updates. Some who could have hoped to report a pension surplus a few weeks ago will have to report a deficit instead,” says Rashpal Bhabra, head of corporate consulting at Watson Wyatt. “Surpluses reached a record level by the end of March, partly because of the way the credit crunch increased corporate bond yields, but pension funds are now back in the red. This is a stark reminder of how volatile the short-term funding positions reported in company accounts can be.”
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Anheuser to Cut Benefits: Reports
Anheuser-Busch, which is fighting a hostile takeover offer from Belgium’s InBev, plans to reduce pension and healthcare benefits for its salaried employees in the United States, according to media reports.
Citing an internal memo, the reports say employees’ individual lump sum payouts will be reduced by about 5% in 2009 and about 15% by 2012.
Workers will also have to make a larger contribution to their health insurance plan, paying 25% of the cost beginning in 2009, up from about 21% today.
“The economic picture has been changing over the past months for all businesses, with sharp increases in costs,” wrote Tim Farrell, Anheuser-Busch’s vice-president of human resources, in the memo.
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Buck Expands in Europe
Buck Consultants has expanded its network in Europe by investing in Phenox Actuarissen, an employee benefits consulting, actuarial and pension services firm based in The Netherlands.
“We are well aware of the excellent reputation Phenox has with its clients and the potential we have for growth in these regions by combining our client reputations and strengths,” says Eddie O’Hara, international managing director of Buck Consultants.
Phenox, which will be rebranded as Buck Consultants, has more than 30 employees in The Netherlands, Curaçao and Aruba.
Buck says the acquisition aligns perfectly with its strategy for global presence and growth. The consulting firm’s global network includes professionals in more than 35 countries.
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BNY Mellon Completes Bank Consolidation Process
The Bank of New York Mellon has completed the process of consolidating and renaming its principal U.S. bank and trust company subsidiaries into two new principal banks.
This consolidation effort, which follows last July’s merger of the holding companies of Mellon Financial and The Bank of New York, was an essential part of the company’s overall integration process that required regulatory approvals and was completed on schedule.
The two principal banks formed as a result of the consolidation of the entities, which mainly were U.S. banks and trust companies, are:
• The Bank of New York Mellon, a New York State chartered bank, which houses institutional businesses including asset servicing, issuer services, treasury services, broker-dealer & advisor services and the bank-advised businesses of asset management.
• BNY Mellon, National Association, which houses wealth management, where a national charter is preferable given the scope of that business. Currently, this bank contains only the legacy Mellon private wealth business, as the legacy Bank of New York private wealth business is expected to be added in the first quarter of 2009.