US employer pension plans are four times more likely to be fully funded than occupational pension plans in the UK, according to new research.

Aon Consulting, a pensions, benefits and HR consulting firm, estimates that, in 2004, only 5% of UK pension plans were fully funded, compared to 20% of US plans.

Aon compared pension information for the US and the UK companies with total pension assets of around $800 billion in the US and E350 billion in the UK and found that the pension plan deficit of a US company represents around two months’ worth of profits (before tax), compared to seven months of profits (before tax) for the average UK company. Worse still, the company found that approximately 25% of UK companies have pensions plans with a deficit representing over 2 years’ worth of profits, while only 5% of US companies find themselves in an equivalent position.

The research also revealed that US pensions plans are better funded than UK plans because US companies have put in cash contributions of over 10% of plan assets over the last 2 years ($90 billion), compared with only 7% for their UK counterparts.

Andrew Claringbold of Aon Consulting in the UK said, Contributions to UK pension plans have doubled over recent years. However, this increase in contributions has been insufficient to compensate for a combination of falling bond yields, increasing life expectancy and poor equity performance.