Inside the Rising Pension Gap at U.K. Companies

The video discusses the resurfacing issue of falling bond yields, which impacts companies with large pension deficits by reducing investment returns. This situation strains companies in the FTSE 153, where pension deficits are a significant portion of their market cap. Companies like Tesco, BT, and BAE Systems are affected, with options like cutting dividends and CapEx being considered. Investor sentiment may influence these decisions, but cutting benefits is a less favored option. Sectors most at risk include industrials, telecoms, utilities, and financials.

What is the main issue caused by falling bond yields for companies with large pension deficits?

• Increased market cap

• Higher investment returns

• Improved shareholder value

• Difficulty in funding future liabilities

Which of the following is NOT a strategy mentioned to address pension deficits?

• Reducing capital expenditures

• Increasing employee salaries

• Cutting plan member benefits

• Cutting dividends

Why is reducing plan member benefits considered a controversial option?

• It is the most favored option

• It breaks promises made to plan members

• It is easy to implement

• It increases company profits

Which sectors are identified as most at risk due to pension deficits?

• Industrials and telecoms

• Retail and agriculture

• Education and tourism

• Technology and healthcare

Which company is mentioned as having a pension deficit exceeding 10% of its market cap?

• BT

• Google

• Amazon

• Apple