Sunday, July 29, 2012

FTSE 350 Pension minefield

UK Pension Liabilities Largest Ever Relative to Market Cap

Aggregate liabilities of FTSE350 companies at 35% of market capitalization. This is a strange one because you would imagine that the share price would fall to reflect these liabilities, but as the price falls the liabilities as a percentage would go up ! So maybe its easier to imagine that without pension liabilities the share price would be equivalently higher by around 33%.

Posted by stillthinking @ 03:43 AM (1230 views)
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3 thoughts on “FTSE 350 Pension minefield

  • stillthinking says:

    Yes I did try and work this out, pensionLiabilities= shareValuex0.35 and sharePrice=realValue-pensionLiabilities. So realValue should be around 4×0.35 or 140% of current. So given that I am sure many are doing much more complex analysis than this, that must mean that anticipated acceptable yields are much lower than they actually appear because yields are based on undiscounted share prices.

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  • I note there is no mention of the effect of pension holidays back in the 80’s. And when these figures are dependent on another figure, set by regulation, one can see how open they are to manipulation.

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  • I like the quote of the week:

    “Always remember that others may hate you but those who hate you don’t win unless you hate them. And then you destroy yourself.” – Richard Milhous Nixon

    Is this hatred because of pensions, one wonders.

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