The U.K.’s $86 Billion Pension Problem Is About to Solve Itself
For U.K. Plc, the sting of Brexit comes with an unexpected bonus. With no effort on their part, British businesses could see pension deficits that have burdened them for years be practically wiped out if the Bank of England raises interest rates as predicted and they budget for slowing gains in life expectancy, according to estimates of New York-based consultancy Mercer.
That will give executives one less thing to worry about as they prepare contingency plans in case Britain can’t strike a deal on splitting with the European Union. Companies like BT Group Plc and Marks & Spencer Group Plc, whose liabilities are almost double their market value, will also remove a stigma that has contributed to years of under-performance in their shares.
“If you bought a basket of these stocks you would probably make money from here,” said Andrew Millington, the acting head of U.K. equities at Aberdeen Standard Investments, which owns shares in firms with big pension liabilities like Tui AG, BAE Systems Plc and AA Plc that he expects will benefit.
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