Companies plug holes

Defined benefit superannuation schemes are company pension programs where the employer promises a set retirement benefit. Dozens of companies are preparing to pump hundreds of millions of dollars into these programs over the next few years to help claw back past losses and reduce funding shortfalls.

The article highlights several major companies: BHP made a large contribution, Westpac has the biggest deficit among banks, Telstra has been working to reduce its pension losses, AMP’s liabilities rose after acquiring AXA Asia Pacific, and Wesfarmers is noted as the only top‑20 company with a defined benefit scheme in surplus.

BHP pumped US$336 million into its defined benefit scheme last year, helping to narrow the scheme’s deficit to US$177 million from US$215 million the year before.

Australian banks generally have sizeable defined benefit obligations because many of the liabilities stem from their overseas operations, particularly past forays into Britain, which generated large pension obligations.

Telstra’s defined pension scheme has about $2.7 billion in liabilities. The scheme’s loss peaked at $457 million two years ago and had narrowed to $194 million last year as the company worked to reduce the shortfall.

Among the top 20 companies referenced in the article, Wesfarmers is the only one reported to have a defined benefit scheme that is in surplus.

Corporate acquisitions can increase superannuation liabilities when an acquiring company inherits the target’s pension programs. The article cites AMP’s acquisition of AXA Asia Pacific as an example that led to a jump in AMP’s superannuation liabilities.

Everyday investors should monitor company announcements about pension contributions and funding status, changes in reported deficits or surpluses, and any notes about overseas pension obligations (for example from UK operations). These items can affect a company’s balance sheet and long‑term cash commitments.