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The ability of FTSE 350 companies to meet their defined benefit (DB) pension obligations is at its highest level in the last decade, PwC analysis says.

The firm's annual Pension Support Index has seen a significant turnaround since the last report, with the index rising seven points to its highest level within the past 10 years.

Calculated using information on the companies' financial strength relative to their DB obligations, the FTSE 350 scored 87 out of 100 at the 2017 year end, compared to 2016's score of 80. It is its highest level since 2007, when the figure was nearly 90 points.

The company calculates financial strength using factors such as net assets, operating profit, profit before tax, cash from operations, and market capitalisations, using data revealed in publically available accounts.

Head of the consultancy's credit advisory practice Jonathon Land warned, however, the improvement could be undone by Brexit and regulatory issues.

"This year's index score has increased compared to last year due to improved company performance and better returns on investment for schemes," he said. "While this brings the index back to the level it was 10 years ago, it masks the fact that over this time there have been many winners and losers within the FTSE 350.

"Certain sectors, in particular retail, have been impacted by the growth in online sales, increased economic instability and uncertainty surrounding Brexit. At the same time, regulation is set to change and the demands placed by The Pensions Regulator (TPR) on trustees and sponsors are set to increase."

He pointed to the government's DB white paper - published in the wake of the collapse of Carillion - which outlined a strengthened funding regime, new penalties for directors who recklessly or wilfully fail to meet their pension obligations, and new punitive powers for TPR.

Retail strategy director Kien Tan also noted the struggling retailing sector, which has recently seen a string of company restructures, with House of Fraser the latest casualty.

"What's clear is that the seismic shifts that might have been expected a few years ago, as e-commerce took off or during the last recession, are finally beginning to happen," he said. "As a result of the continued upheaval in the sector, we expect that trustees and sponsors will have to make tough decisions quickly in response to the challenges that retailers are facing."

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