Business

AMMAN — Syria's hopes of cutting its import bill thanks to an expected healthy harvest may be thwarted by the problems of getting hold of the wheat while the war rages.

The government is keen to purchase grain from farmers in rebel-held areas to prove its control and ensure ample supply of bread for citizens under its rule, although many, fearful of getting payment from the state, have turned to crops like lentils.

Officials and experts say the main challenge, as the harvest begins in earnest in the next two weeks, is how much it can entice farmers to sell to the state, combined with the ability to safely move the crop to collection centres in government held areas. 

More than half of Syria's wheat production areas in both the north and the south have fallen under rebel control.

"We want to buy the whole production of this season," said Musa Nawaf Al Ali, the head of the state grains marketing organisation that buys the crop from farmers, adding the authorities had opened new collection centres and offered more incentives.

The lure of a once lavish subsidy system has been hurt as the war forces some farmers to sell their crop cheaply to middlemen and merchants who smuggle it to neighbouring Iraq and Turkey.

In the rich arable northeastern Hasaka province, where at least 40 per cent of Syria's pre-war wheat production of around 4 million tonnes was grown, there has already been a shift away from wheat and cereals.

"The farmer who was more and more afraid the state may collapse, year after year of conflict, planted more lentils, cumin, coriander and fenugreek," said Kurdish farmer Rudi Sheiko from Qamishli. 

Large fields that once were sown with wheat are now planted by these cheaper crops that have a shorter harvesting span and bring better profits.

Food handouts

The government's drive to reduce expensive food imports comes after the collapse of its ability to feed its people.

"Now 50 per cent of people inside Syria are food insecure, meaning they need food assistance for their daily needs," said Abdessalam Ould Ahmed, of the United Nations Food and Agriculture Organisation (FAO), who is responsible for the region. "Before the crisis it was less than five per cent."

"Imports will increase simply because the needs are increasing and production has collapsed and it is now only 25 or 30 per cent of what it used to be 25 years ago. So therefore there is a need for imports," Ould Ahmed added.

The state announced earlier this month a rise in the price of a kilogramme of wheat it bought from farmers to 61 Syrian pounds (25 cents) compared to 45 pounds per kilogramme last year, to flush out more wheat from its own and rebel-held areas.

"As for the amount that farmers will deliver to the state, of course the driving factor is the prices," Abdul Maen Qadmani, head of cereals production in the agriculture ministry, said.

Early rainfalls this winter had encouraged farmers to start planting wheat since mid-November even in areas where fighting raged close by and despite shortages of seeds and fertilisers and enough fuel to plough arable land, agricultural experts say.

Syria's wheat production is estimated to be at least three million tonnes this year with the best rainfall season in a decade.

Last year, wheat production stood at 1.865 million tonnes, according to the government. That figure was disputed by FAO, which said wheat output was the lowest for 25 years.

Syria's barley crop is expected to hit around 1.2 million tonnes, from less than 800,000 tonnes production last year, with harvesting under way.

AMMAN — National exports to the counties of North America Free Trade Agreement (NAFTA) increased by 6.5 per cent in the first quarter of 2015 reaching JD226 million, compared to JD215 million in the same period of 2014, the Department of Statistics (DoS) announced Wednesday. 

The US accounted for the biggest share of these exports, according to DoS, which indicated that national exports to the Grand Arab Free Trade Zone, including Iraq, went down by 14 per cent.

The DoS report showed that national exports to non-Arab Asian countries, including India, dropped by 8.9 per cent, and exports to European Union (EU) countries, including Spain, fell by 28.9 per cent. 

Other data revealed that imports from EU countries increased by 5.5 per cent, while imports from non-Arab Asian countries declined by 14 per cent.

Imports from the Grand Arab Free Trade Zone and the NAFTA countries regressed by 9 and 5.4 per cent respectively, DoS data indicated.

Separately, Zarqa Chamber of Industry President Thabet Wer said Wednesday that the value of industrial exports from Zarqa reached $274 million during the first four months of 2015, 1.5 per cent higher than the value during the same period of 2014.

The total number of certificates of origin the chamber issued during the January-April period of 2015 stood at 4,312 covering different industrial sectors, he added.

The chamber's exports to North American countries stood at $149 million, constituting 54.3 per cent of the total exports, while exports to Arab countries amounted to $95 million, accounting for 34.7 per cent, Wer indicated. 

AMMAN — The prospect of Comprehensive Multiple Transportation Co. (CMTC) continuing public transport operations depends on what the government provides in support for the company.

Chairman Saud Nuseirat told the shareholders during a recent general assembly meeting that besides the continuity of operations, government backing was essential to collect the company's dues from Greater Amman Municipality (GAM) and to settle amounts payable to creditors.

Nuseirat was responding to a question from the government representative who asked about the possibility of collecting the amounts required from GAM, the capability of CMTC to pay back the dues it owes and the likelihood that the company maintain its status as an ongoing concern in light of the company's latest financial results.

The chairman informed the shareholders about the discussions that the board of directors held in follow-up to secure the amounts owed to the company by GAM and the efforts exerted to collect the debt.

He said that renewing the trading of the company's shares on the Amman's Bourse was tied to what CMTC receives in support from the government.

According to Arab Professionals, the auditor which is a member of Grant Thornton, losses accumulated by the company until the end of March 2015 have reached JD29.2 million, noting that the loss in 2014 amounted to JD4.6 million. 

The consolidated interim financial statements as of March 31, 2015, showed a JD22.4 million outstanding bank debt, of which JD8.9 million is short term (less than one year), and JD13.5 million is long-term.

Other obligations include JD0.7 million instalments related to finance lease contracts, JD3.9 million dues to GAM and JD2.3 million provision related to lawsuits.   

"Accumulated losses exceeding 97 per cent of the company's JD30 million authorised and paid-up capital, and current liabilities greater than the current assets by JD14.5 million, indicate that the company is incapable to continue," the auditor wrote in a report.

The auditor said the Jordan Securities Commission and the Amman Bourse should be notified about the extent and causes of the losses as well as the work plan proposed to remedy the situation.

Arab Professionals revealed that several government bodies have slapped a lien on the company's assets in addition to a lien slapped by the Social Security Corporation (SSC) on the assets of the entity's subsidiaries: Asia Transportation and Investment Company, Al Tawfik Transportation and Investment Company and Al Dhilal Passengers Transportation Company.

Several accounts were qualified by the auditor for signs of impairment value, such as goodwill whose book was specified at JD11.3 million, and buses whose net book value was given at JD13.8 million. 

Impairment value was mentioned also in relation to JD1.9 million in  unfinished projects that are disputed in court against a contractor for not meeting the specifications required in the contract.

According to the auditor's review, JD12.4 million are doubtful assets owed by GAM to the company as financial support in accordance with an agreement signed between them. Against this balance, CMTC allocated JD7.6 million as provision at the end of March 31, 2015.

Arab Professionals said the company, also known by the brand name ABUS, did not take provisions to cover fines due to the SSC, interests legally due on the amounts that the company was judicially decreed to pay,  and JD3.6 million in interest related to delays on overdue and unsettled discounted bills between 2013 and 2015.

The company's profit and loss statement at the end of this year's first quarter showed a JD0.7 million operational loss which, after taking into consideration miscellaneous income, administrative expenses and financing costs, deepens the loss to JD1.1 million.

During the first quarter of last year, the operational loss amounted to JD1.1 million that deepened with other expenses to JD1.5 million loss.

Nuseirat indicated in the 2014 annual report that through several meetings held with parties concerned in the transport sector, besides the official correspondence to these bodies and the Prime Ministry, the board of directors was able to emphasise the company's dire need for operational financial support to cover the gap arising from set charges.  

"If the government and GAM do not buttress the company, its losses will exacerbate and accumulate leading to bankruptcy," the chairman wrote in a foreword, describing recent talks with the Economic Development Committee at the Prime Ministry on supporting the company as positive.  He explained that when the government bought a controlling stake in CMTC from Kuwait's City Group, besides a 10 per cent GAM equity, the company's losses were close to 100 per cent of equity.

He said that because of financial privation, the company did not settle up obligations to banks and creditors as well as JD1.6 million annually in bank interest, and was unable to repay the debt's principal amount.

Describing the fleet of buses as aged, Nuseirat alluded to technical problems in the Yutong vehicles, originally bought by City Group.

According to the annual report, CMTC's operations cover 92 public transport routes, mostly in GAM-administered areas where it runs 387 buses.

Additionally, ABUS runs 145 buses on other routes assigned to the Land Transport Regulatory Commission.

Among plans listed by the company for this year, after completing  a restructuring of the routes agreed upon in order to specify CMTC's needs of routes and buses, is to obtain permission to sell dilapidated buses and not to replace any of them. It is estimated that, in the first phase, 129 buses will be scrapped.

CMTC, whose workforce comprises 459 employees or 584 when workers at the subsidiaries are included, aims to develop 130 dunums at Schneller, a site near Hittin refugee camp on the Amman-Zarqa road, in a move to unify all the company's facilities in one location.

At present, CMTC conducts heavy maintenance at Ain Al Basha where its administration offices are also located.

Periodic and preventive maintenance takes place at North Marka where the warehouses are situated and the area is used as a parking garage for buses.

A rented location in Sahab serves as an area to stockpile idled buses.

Moreover, the company plans to re-examine contracts, especially those related to restructuring of unusable routes, and to operate 235 buses on 42 routes noting that the Customs Department has refused to exempt CMTC from fees on 75 Yutong buses imported from China, subsequently increasing indebtedness along with higher book value for the buses.

CMTC wants the government to form a neutral committee to re-examine the previous support contract with GAM and come out with a judgment, 

besides rescheduling the loans and credits to banks and creditors to the longest possible periods.

It also seeks better government control on roads in order to reduce traffic congestion, preserve space for bus stops, and prevent infringement on the routes where CMTC enjoys operational exclusivity.

"Higher prices of fuel and spare parts at a rate more than the increase in  bus fares as set by government parties is a main concern that puts the company at a disadvantage," the report said.

Although CMTC's capital investment amounted to JD29.8 million at the end of last year, the shareholders' equity stood at JD0.9 million because of accumulated losses.

IRBID — Irbid Chamber of Industry President Hani Abu Hassan and a delegation representing the Viborg Municipality of Denmark and the Danish Refugee Council discussed on Tuesday issues related to solid waste, business development, clean energy and water.

Abu Hassan briefed the delegates on the nature of industry in the city and its different industrial products that reach different parts of the world. Council delegates reviewed the humanitarian services offered by the council, which was established in 2003 after the Iraqi crisis, and its role in the Syrian crisis.

They added that most of the council's works focus on in-kind assistance to refugees and host countries. The meeting also addressed the contributions the Viborg Municipality could offer in the health, cultural and industrial sectors, especially that local governance in Denmark enjoys decentralisation, whereby industry and trade issues are within the mayor's authorities. 

AMMAN — Industry, Trade and Supply Minister Maha Ali and Kenneth Hyatt, deputy undersecretary for international trade at the US Department of Commerce, on Tuesday discussed ways to enhance bilateral economic cooperation at all levels, especially trade.

Ali stressed the importance of increasing bilateral economic cooperation and benefiting from the Jordanian-US free trade agreement, which has contributed to improving the trade volume between the two countries, especially increasing Jordanian exports to the US.

The minister also called on the US to support the Jordan Enterprise Development Corporation (JEDCO) which supports micro-projects and creative ideas. Ali invited US companies to run investments in Jordan for having promising opportunities in many sectors, especially in the industrial, ICT and energy sectors, among others.

Hyatt said the US aid programme to Jordan focuses on three main sectors: renewable energy, health and ICT. He also noted that there are a lot of economic fields, where economic cooperation is available for US companies to have their schemes in the Kingdom.

AMMAN — United Arab Shipping Company (UASC), a Mideast-based container shipping line and emerging global carrier, announced in a press statement on Sunday the establishment of a wholly UASC-operated agency in Jordan.

Uffe Østergaard, chief commercial officer of UASC, said in the press release: “Jordan is a key market for UASC in the Middle East and we are committed to ensuring our customers that they are provided with the highest quality of service excellence and reliability standards.”

KUWAIT CITY — Oil prices could continue to rebound in the second half of 2015 following signs of growth in demand and a drop in high-cost production, an Organisation of Petroleum Exporting Countries (OPEC) official said Monday. 

"It is expected that a kind of a balance will exist in the oil market in the second half of 2015 which will support prices," Kuwait's governor at OPEC, Nawal Al Fuzai, told reporters.

"Prices are improving, growth in supplies from outside OPEC, especially shale oil, is lower than before and demand is recovering," she said.

This has pushed both OPEC and the International Energy Agency (IEA) to adjust upward their forecasts for crude demand, Fuzai added.

She remarked that it was too early to predict any decision by OPEC at its meeting next month.

The 12-member group decided in November not to cut output, a decision that saw crude prices dive 60 per cent before starting to rebound.

Over the past few weeks, oil prices have climbed about 40 per cent but remain well below their levels of more than $100 a barrel in June last year.

The aim of OPEC's decision was to curtail the fast-growing shale oil sector in the United States. 

Fuzai said that she does not see oil prices dropping this year barring any major events, such as a sudden and unexpected slide in demand.

But she warned that an expected deal between Iran, a member of OPEC, and Western powers over the Islamic republic's nuclear programme could heap added pressure on oil prices even though Tehran is not likely to resume exports soon.

Fuzai said surplus supplies of crude oil on the market dropped from around 2 million barrels per day (bpd) late last year to between 1-1.2 million now.

She added that a meeting of technical experts from OPEC and non-OPEC conventional producers was held this month but no decision was taken.

Analysts say, however, that any gains in oil prices are being capped by continued concerns over a global oversupply in the face of weaker demand.

Separately, a senior Iranian official said on Monday that OPEC is unlikely to implement a production cut at its next meeting in June.

Asked if OPEC would cut output at the upcoming June 5 meeting, Iran's Deputy Oil Minister Rokneddin Javadi told Reuters: "I don't think so."

Iran, along with Venezuela, has repeatedly called for OPEC to cut output to shore up low prices that have eaten into producers' oil revenues. 

Javadi's comments signal an admission that the group was unlikely to agree to a reduction, especially after its current strategy has succeeded in curbing non-OPEC output and allowed OPEC to regain market share.

OPEC, led by oil kingpin Saudi Arabia, decided at a meeting in November to maintain output and keep global markets amply supplied so that low prices would force high-cost US shale oil producers to cut production first.

Javadi indicated later that Iran is still likely in June to push for output reduction or cooperation on the right amount of oil to be delivered to the market.

The meeting could "reinforce cooperation between the members because OPEC is an organisation that could make policies for oil price orientation," Javadi told reporters on the sidelines of the Asian Oil and Gas conference in Kuala Lumpur.

Export levels after sanctions lifted

Iran hopes its crude oil exports will return to pre-sanctions levels within three months once a deal with major powers to lift an oil embargo is finalised, he said.

"We hope we can come back to the export levels that we had before the sanctions," Javadi, who is also the managing director of the National Iranian Oil Company, told Reuters.

"Yes, 2.5 (million barrels per day), around," he said, adding that this could possibly be achieved in three to six months.

A recent framework deal on Iran's disputed nuclear programme between Tehran and world powers could see sanctions on Iran eventually lifted if a more permanent pact is finalised by a June deadline.

The sanctions have more than halved Iranian oil exports since 2012 to about one million bpd, mainly to Asia.

Iran currently has less than 10 million barrels of crude stored onboard tankers that could be released post-sanctions depending on market conditions, Javadi said.

He remarked that the OPEC producer expected to claw back lost market share in Asia and Europe.

"It depends on market situation and price level, but we will come back to the traditional trade that we had before," he said, adding that Asia could take more than 50 per cent of Iran's exports.

Discussions on OPEC making room for the return of Iranian oil would depend on whether sanctions were lifted, he said.

Iran says that an increase of its oil production will not cause a price crash. It expects other OPEC members to make way for extra barrels, but so far there is no sign that other OPEC members are willing to cut supply.

Iran plans to hold a conference in London in September to attract investors for its exploration and production sector, Javadi said.

Javadi said he expected the oil price to rise to around $80 a barrel by the end of 2016.

"From a commercial point of view, today's prices should be sustained and increase gradually," he indicated on the sidelines of the Asia Oil and Gas Conference in Kuala Lumpur. "But it depends on the political situation and what's going on in the Middle East and Arabian countries."

BARCELONA — Around one in seven people across the globe still live without electricity, despite some progress in expanding access, and nearly three billion cook using polluting fuels, the World Bank said on Monday.

The global electrification rate rose to 85 per cent in 2012 from 83 per cent in 2010, pushing the number of people without access to electric power down to 1.1 billion from 1.2 billion.

India made significant advances, but progress in sub-Saharan Africa was far too slow, indicated a report tracking the Sustainable Energy for All (SE4ALL) initiative, launched by the UN Secretary-General in 2011.

Almost no headway was made in switching people from biomass cooking fuels such as kerosene, wood and dung, the report showed.

"We are heading in the right direction to end energy poverty, but we are still far from the finish line," said Anita Marangoly George, a senior director for energy with the World Bank.

The report warned that traditional indicators can overestimate energy access because power supplies are limited or unreliable for many communities.

For example, new evidence showed that in the Democratic Republic of Congo's capital Kinshasa, 90 per cent of people are judged to have access to electricity because of widespread grid connections, but the streets are dark most nights and few households can use their electrical appliances.

According to Ben Garside, a senior researcher with the London-based International Institute for Environment and Development (IIED), too much emphasis was placed on investing in large-scale energy projects that feed into national grids.

"The aim is to generate the maximum amount of megawatts, but that won't address the access issue, which is in rural areas," he said.

Investment
to meet goals

The SE4ALL initiative has three goals, to be met by 2030: Providing universal access to modern energy services, doubling the rate of improvement in energy efficiency and doubling the share of renewables in the global energy mix.

The report pointed out that the share of renewable energy, including hydro, solar and wind, grew fast at 4 per cent per year from 2010 to 2012. But the annual growth rate should speed up to around 7.5 per cent to achieve the 2030 goal, it said.

Energy efficiency also improved, with energy intensity, global economic output divided by total energy consumption, dropping more than 1.7 per cent a year, but that rate must also accelerate, the report added.

"We will need to work a lot harder especially to mobilise much larger investments in renewable energy and energy efficiency," the World Bank's Marangoly George stressed.

According to the World Bank and the International Energy Agency, which co-produced the report, annual global investments in energy would have to triple from around $400 billion now to as much as $1.2 trillion to meet the SE4ALL targets.

Of this, between $40 billion and $100 billion is needed each year to provide everyone with access to electricity. Only $4.3 billion is required for all to use modern cooking fuels. 

One barrier to eliminating dirty fuels is that they are often subsidised or free, unlike cleaner options, said IIED's Garside.

Developing countries require more technology relevant to sustainable energy, the report said, adding that import taxes and other non-tariff barriers often constrain their markets for clean technologies.

Gains could also be made by better understanding of the overlaps with other areas of development. For instance, more efficient water use reduces demand and in turn the need to pump and treat water, cutting electricity consumption.

AMMAN — Arab Bank announced in a press statement on Sunday the end of its e-commerce promotional campaign, in collaboration with Visa, for Visa credit card and Visa internet-shopping cardholders.

“The campaign ran during the month of April 2015 in Jordan, Palestine, Egypt, Lebanon, the UAE, Qatar and Bahrain. Campaign offered the winners cash-back rewards and bonuses when using their Visa credit and internet-shopping cards to shop online,” the press release said.

Naim Al Hussaini, executive vice president and head of consumer banking at Arab Bank, said in statement: “This  campaign falls within Arab Bank’s strategy to promote internet shopping and reward customers who use their Visa credit and internet-shopping cards with exclusive offers.”

Karim Beg, Visa head of marketing for Middle East North Africa (MENA), said: “E-commerce growth in the MENA region has been strong in recent years, with consumer interest driving a greater influx of new merchants in the online market.” 

PARIS — While borrowers rejoice at the ultra low and even negative interest rates in Europe, savers fret and life insurance companies and pension funds face what is virtually a mission impossible.

Despite a spike in sovereign bond yields in the past couple of weeks, levels still remain ultra-low. The rate of return to investors on benchmark 10-year German and French bonds has stayed below one per cent in recent months and the yields on long-term Swiss debt even went negative.

Sovereign bonds are very important for long-term investors as they are a safe investment that allows them to lock into guaranteed returns.

For life insurance companies and pension funds which are investing the savings of others, the safety of sovereign bonds has led regulators to require them to place certain percentages of their investments in bonds.

But the unprecedented rock bottom interest rates are posing a problem as many life insurance polices offer guaranteed interest higher than current bond yields.

Last year in France, life insurance contracts paid on average 2.5 per cent.

Life insurance companies can temporarily dig into investment funds to continue to pay high rates and attract investors, but this is a strategy experts said cannot continue if rates remain low.

"This drop in rates and the uncertainty that has accompanied it is affecting life insurance returns," said Claude Chassain, an actuarial expert at Deloitte.

The level of interest rates has been worrying the industry for months, and analysts and ratings agencies are concerned about the industry.

"Low interest rates in the euro area pose substantial challenges to the life insurance industry," said International Monetary Fund (IMF) staff in a blog post earlier this month.

"Mid-sized insurers with guaranteed returns and long-dated liabilities that are not matched by similarly long-dated assets face a particularly high and rising risk of failure," they added. 

Collateral damage  

German insurers, which offer much higher guaranteed returns than their French counterparts, have been particularly critical of the European Central Bank's (ECB) ultra-low interest rate policy, and its 1.1-trillion-euro ($1.2-trillion) bond buying stimulus programme that has driven down bond yields.

"The problem with German insurers is that not long ago they guaranteed returns on [products] like long-term euro contracts. These yields must be respected every year, even as rates fall," explains Chassain.

According to Karsten Eichmann, president of German insurer Gothaer, that situation has left companies like his caught in an agonising pinch.

"The insurance sector in Germany is currently facing a considerable degree of damage, in the order of several billion, provoked by the ECB's policy of very low rates," Eichmann wrote in the Sueddeutsche Zeitung in early May.

The result, he noted, is "it is clear that in an environment of rates close to zero, life insurance becomes a money-losing activity in all its forms".

Pension funds are also sounding the alarm.

PensionsEurope, the trade organisation for European pension institutions, warned regulators in a report in late April that "pension funds can not be considered collateral damage of the ECB's [quantitative easing policy] when the problem involves retirement savings of millions of Europeans".

Chassain says low interest rates like those currently in place are destined to make life difficult for any insurer with long-term guarantees on return.

"In the United Kingdom, pension funds abandoned fixed-yield agreements quite a while ago in favour of fixed-contribution schemes that allow them to take economic conditions into account at the time [the client] retires," Chassain says.

For insurance companies, the strategy is to invest in high-risk assets like corporate bonds, stocks and infrastructure projects. Meanwhile, most also encourage clients towards options that do not guarantee savings invested, such as unit-linked plans.

That same trend has already taken hold in Japan, where interest rates have remained low for quite some time. 

Insurers have restructured their portfolios to reduce investments with fixed rates of return and replaced those with plans tied to demographic risk, such as term life insurance or provident funds, Chassain says.

In France, payments into unit-linked plans increased 38 per cent in the first quarter of 2015 compared to the same three-month period the previous year.

Historically low interest rates in the euro area are also  becoming an increasing headache for companies forced to set aside billions in extra cash to meet their pension obligations to employees.

The ECB's ultra-easy monetary policy, with record low interest rates and unprecedented bond purchase programmes, has contributed greatly to the decline in yields on bond markets.

That is not good news for the in-house schemes that many companies offer employees to help top up their state pensions.

Like banks and insurers all across the eurozone, these corporate pension funds usually rely on adequate yields or interest rates to help increase and maximise their clients' investments.

But with interest rates in the euro area around the lowest they have ever been, pension funds are finding it difficult to meet those demands.

The corporate pension scheme is particularly well-established and popular in Germany. Around 17.8 million Germans had signed up to a corporate scheme at the end of 2013, or 60 per cent of people in jobs required to pay social insurance contributions, according to data compiled by the Federal Labour Ministry.

Given the low yields, companies are having to dig deeper into their own financial reserves to fulfil their pension obligations.

German flag carrier Lufthansa, for example, set aside an additional 2.5 billion euros ($2.8 billion) in pension provisions for 2014 in order to meet the returns of 6 to 7 per cent it had guaranteed its employees. That burden was one of the factors that drove profits down to just 55 million euros last year.

Power giant E ON set aside an additional 2.2 billion euros in pension provisions last year and carmaker Daimler an extra 2.9 billion euros.

According to a study by consultants Towers Watson, the companies that make up the blue-chip DAX 30 stock index saw their pension obligations jump by 25 per cent to 372 billion euros last year.

"The ECB's policy of low interest rates is having a strong effect on the financing situation for corporate pension schemes in German companies," Towers Watson said.

British companies are facing similar problems, including several on London's FTSE 100 index of blue-chip stocks.

According to JLT, a pension and benefits consultancy, "a number of FTSE 100 companies will be forced to increase their cash contributions to their defined benefits pensions schemes in 2015".

JLT calculated that the total deficit in FTSE 100 pension schemes at the end of last year amounted to £80 billion (110 billion euros, $125 billion) wider than a year earlier.

Dilemma  

This places companies in a dilemma between safeguarding their own financial reserves while still offering attractive pension packages to their workforce as demand for top-up schemes increases in the face of dwindling state pensions.

"Employees' expectations with regard to corporate pension schemes will continue to rise. Adequate pension provisions will play a key role for companies looking to hire and keep hold of skilled employees," said Thomas Jasper at Towers Watson.

"In order to remain attractive as an employer, companies need to offer attractive pension schemes while at the same time managing costs and risks," he added.

German airline Lufthansa, for one, is currently looking to re-think its retirement system for employees.

"The risks and costs of the existing pension system are jeopardising the airline's future sustainability," argued Lufthansa's personnel chief Bettina Volkens, insisting that pension provisions for all groups of employees needed to be reorganised.

But talks on the issue with unions are deadlocked.

Lufthansa's pilots, for example, have staged a series of walkouts over the past year in protest over management plans to scrap an arrangement under which pilots can retire at 55 and receive up to 60 per cent of their pay until they reach the statutory retirement age of 65.

Nevertheless, despite the challenges many companies are facing with their corporate pension schemes, the government is looking at how such programmes can be extended even further to small-and mid-sized companies.

With state pensions now averaging less than 800 euros per month, private sector employees are being encouraged to take every action to buy additional pension coverage.