Big rise in charities' total pension liabilities last year

A report by Charity Financials says the total liabilities of 335 charities with pension liabilities of at least £500,000 is £2.45bn, up 14.5 per cent

Pensions are being highlighted as a major headache by the sector
Pensions are being highlighted as a major headache by the sector

The largest pension liabilities in the charity sector rose by a total of £310m last year, although the rate of growth has slowed significantly in recent years, new data shows.

The total liabilities of the charities with pension liabilities of more than £500,000 rose by 14.5 per cent to £2.45bn, according to a report from the information provider Charity Financials.

The 2012/13 growth rate of 14.5 per cent compares with 19.7 per cent the year before and 28 per cent in 2010/11. In 2008/09 and 2009/10 it had been far higher, at 48 per cent and 72 per cent respectively.

Pensions have been highlighted as a major headache for the sector in recent weeks, with the Charity Finance Group saying pensions were the "elephant in the room" and possibly the biggest issue facing charities. The National Association of Pension Funds warned that the charities sector could be disproportionately hit by changes to the way the Pension Protection Fund charges levies.

The largest proportional rise recorded by Charity Financials came at the Girl’s Day School Trust. In the year to 31 August 2012, it had £24.7m of liabilities, up from £599,000. The rise came because it withdrew from the Independent Schools Pension Scheme.

The charity with the largest individual liability was the Wellcome Trust, with £117.7m in 2012/13, up 19.6 per cent on the previous year.

A spokeswoman for the trust said: "Our total pension liability is covered 139 times over by the net value of our £16.5bn investment portfolio."

The second and third-largest liabilities on the list are for the National Trust and the Church Commissioners for England. The NT’s liabilities rose by 4.8 per cent to £115m in 2012/13, while the church’s rose by 7.2 per cent to £111.8m in the calendar year 2012.

Other charities posting large rises included the RSPB, whose liabilities rose by £21m to £67.8m in 2012/13, having also risen by more than a third the year before.

Tim Pons, pensions manager at the RPSB, said that several measures were being taken by the charity to reduce its pension scheme deficit, including closing the final salary section of the scheme to new entrants. "The RSPB trustees do not expect the pension deficit to represent a significant constraint over the use of financial reserves for the foreseeable future. The next triennial review is due to be completed by July 2016," he said.

At Nuffield Health, pension liabilities rose by £21.9m to £106.8m in the calendar year 2012. A spokeswoman for the charity said that in 2013, a period not covered by the Charity Financials report, the liabilities fell by £15.1m.

The Guide Dogs for the Blind Association had the biggest fall in liabilities, where its pension liability fell by £15.2m to £31.0m in 2012.

A total of 379 charities had pensions liabilities of £500,000 or more, but the £2.45bn includes only the 335 for which Charity Financials had access to data for all of the past six years.

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