British company-run pensions plans are four times as likely to have insufficient funds to cover future payouts than their US counterparts, according to a survey by Aon Consulting.

While deficits in final-salary, or defined benefit pensions are a business and political issue on both sides of the Atlantic, shortfalls in UK retirement plans are relatively more acute than is the case with US schemes, Aon said.

Only five per cent of British pension schemes were fully funded to meet future obligations at the end of 2004, compared with 20 per cent of US funds in that position.

"Contributions to UK pension plans have doubled over recent years. However, this increase in contributions has been insufficient to compensate for a combination of falling bond yields, increassing life expectancy and poor equity performance," Andrew Claringbold, of Aon Consulting, said.

The size of British pension deficits is aggravated by the fact that UK occupational benefits must increase in line with retail prices, making UK pensions more susceptible to changes in long-term interest rates, Aon said.

"More generally, UK companies have not increased their level of cash contributions to the same extent as their counterparts in the US," Mr Claringbold said.

The average pension plan deficit of a British firm accounted for seven months of a UK firm's pre-tax profits, compared with about two months for a US business.