Scottish companies with final salary pension schemes have watched their deficits almost double from £3.2 billion to £6bn over the past 12 months, despite pumping in £1.4bn of cash.
Two-thirds of the schemes are likely to be worse off at the end of 2013 than they were a year ago despite the company contributions and strong equity markets, according to the research from independent pensions and risk consultancy Hymans Robertson .
It says the deterioration is mainly due to a fall in the corporate bond yields used to price the cost of future pensions.
Calum Cooper, partner and scheme actuary at Hymans Robertson, said: "While the majority of Scottish plcs have being paying deficit reduction contributions over the past year, our report shows that the situation has worsened."
The average level of pension deficit was found to have increased by £100m, or 3% of market capitalization.
Pension contributions typically cost companies one month of earnings, more than half of it on repairing the deficit rather than paying for the benefits of current employees. The average amount spent on dividends is two months of earnings.
Compared with those of the FTSE-350, Scotland's 27 schemes have deficits equivalent to six months of earnings on average, while 35% of them would need more than a year's earnings to plug the gap compared with 11% of the FTSE-350.
Martin Potter, partner at Hymans Robertson, said the gap could be explaind partly by Scotland's historic industrial base. "The typical industrial sector company would need five months to repay the deficit, it is typically four days for a financial sector company. That is the legacy where a lot of industrial companies have shrunk but been left with large pension schemes, whereas financial service companies have grown."
He added: "Just throwing cash at the problem may not be the best solution. Pensions risks are inter-connected and Scottish pension funds need to manage their liability risks as a whole rather than just treat the deficit as a mortgage to be paid down."
The typical Scottish plc was found to have 19p in every pound of market cap in unhedged pension liabilities, which Mr Cooper said was "leaving itself vulnerable to situations in which investment conditions deteriorate". Hymans urges more focus on tackling the risks of pensioners living longer, using market innovations enabling them to be hedged at reasonable value.
These include buy-ins (offloading the risk) for older pensioners, including medically underwritten buy-ins to take into account the actual health of the membership, and longevity swaps where schemes 'lock in' to a fixed longevity assumption and receive payments based on the schemes' actual experience.
A survey of 150 UK schemes by PwC this week found they will take on average 11 years to repay deficits - the same as in 2009.
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