Combined employee benefit liabilities of BSE 100 companies increase to Rs. 4,227 billion

NEW DELHI, INDIA: Towers Watson, a leading global professional services company, released the "Employee Benefits Accounting and Risk study", an annual report analysing financial statements of 94 of the BSE 100 companies as at 31 March 2013.

According to the report, the unfunded employee benefit liabilities have decreased from 32 percent to 12 percent in a span of six years. Despite this, combined estimated employee benefits liabilities covering 94 of the BSE 100 companies registered an increase of 17 percent to approximately Rs. 4,227 billion as compared to approximately Rs. 3,600 billion in the previous year (which covered 99 companies). Further, the combined overall funding of the total DB liabilities has steadily increased from 86 percent in 2011 to 88 percent in 2013.

While there has been an increase in the combined overall funding, the funding level for Gratuity plans and DB Pension liabilities also witnessed increase from 6 percent and 8 percent over the same period. This revealed that a significant portion of the corporate liability on account of long term employee benefits is now better funded than a year ago.

Even with an increase in liabilities and potential economic pressures, companies are contributing more to these plans. The 2013 contributions were almost twice that of ‘service cost' (which represents the cost of one year's additional benefit accrued) on an average basis for the BSE companies.