UK regulatory body the Financial Services Authority (FSA) has used the excess income generated from fees charged to firms this year to help fund its GBP91.3 million pension deficit.
The UK’s financial watchdog said in its annual report that the income generated by fees charged to financial services companies exceeded its expenditure by 1.2%, and the cash will go towards its final salary scheme which is now closed to new members.
The FSA said that the deficit had grown to GBP91.3 million from GBP80.3 million last year due to increases in assumptions relating to inflation and life expectancy, plus a reduction in the corporate bond yield.
The contribution rate for the year was 23% of pensionable earnings plus GBP9.8 million as an additional deficit reduction contribution. For next year, the contribution will be 23% of pensionable earnings with an extra GBP6 million contribution, totaling GBP15.8 million over the two years.
The FSA said in the report that it continues to work with the pension scheme trustees to secure the accrued pension benefits of employees through appropriate levels of funding and mitigation of the risks arising from the pension scheme. The regulator added that the liabilities will not crystallize for many years and believes that it will be able to meet its liabilities when they fall due.