There has been a sharp rise in the amount of money employers are putting into their pension schemes as they make extra payments to eradicate shortfalls.Figures from the Office for National Statistics (ONS) show that a total of £12.2bn was paid in by employers during the first quarter of this year.

Nearly half of that, £5.9bn, was due to special payments, which were 134% higher than a year ago.

The total level of contributions was up by 60% in the same period.

“The rise in employer contributions is happening earlier and to a greater extent than many people expected,” said Stephen Yeo of the actuaries Watson Wyatt.

“If the trend continues over the remainder of the year, £18bn more will be paid into schemes in 2006 than in 2005, which was itself a record year for employer contributions.”

New laws

The main reason for the increase is that the recent changes in pension fund law mean that employers and scheme trustees must put in place a recovery programme if they know there is a deficit in their scheme.

Typically this means extra lump sum payments as well as higher regular contributions.

Last year the Pensions Regulator estimated that UK employers would probably have to pay an extra £130bn into their final salary pension schemes to eliminate their deficits during the next 10 years.

In recent months a number of large employers have revealed that they would be doing this.

Among them have been HBOS, WH Smith, Sainsbury’s, British Airways, BAE Systems, the drinks firm Diageo, Rolls Royce, Reuters, Lloyds TSB and the Bank of England.