The industry’s final salary schemes had a combined deficit of £33.4bn in 2011
Former BDP chairman Richard Saxon has warned that the construction sector’s multibillion-pound pension deficit is set to get worse rather than better, piling financial pressure on employers.
The industry’s final salary schemes had a combined deficit of £33.4bn in 2011, according to the most recent figures available from the Pensions Regulator - with the total thought to have increased further since then.
Pensions consultancy Hymans Robertson has estimated that the total deficit of final salary pension schemes across all sectors of the UK economy has worsened by £80bn since the vote for Brexit.
Saxon was in charge of BDP for six years until 2002, when the practice was struggling with a growing pension deficit that hit £88m at one point and threatened the firm’s future.
He told Building: “However bad it is now, it’s going to get worse. People are continuing to live longer and interest rates are falling so returns on investment are weaker.”
He added: “The concept of a pension fund is a busted flush, it’s gone. Firms who have historic commitments can’t back out of those commitments, but those who don’t are not starting defined benefit schemes.”
Saxon said BDP - bought by Japanese engineering giant Nippon Koei for £102m in March - had got its pension deficit under control.
Since this article was published BDP has asked us to clarify that it severed its connection to the pension scheme a year ago. We are happy to clarify this matter.