(Corrects paragraph 3 to say size of deficits exceeds 40percent, not 50 percent)
* Falling bond yields push UK pension deficits to recordlevels
* Investors may be at risk from cash calls, analysts warn
* FTSE 350 pension deficits: http://reut.rs/29DEudU
* UK gilts and corp bond yields: http://reut.rs/29JknPa
By Alasdair Pal and Thyagaraju Adinarayan
LONDON, July 14 (Reuters) - A $500 billion gap in Britishcompany pension schemes, exacerbated by a further fall in bondyields after last month's Brexit vote, is stretching balancesheets and could discourage investors from buying some firms'shares.
The collapse in bond yields, which pension funds rely on forincome to pay retirees, has left the near-5,000 underfundedpension schemes in the UK in an even worse position and hassharpened investors' focus on the companies most at risk.
Companies on the FTSE 100 are running a combinedpension deficit in excess of 90 billion pounds, Thomson Reutersdata shows. Deficits at BAE Systems, G4S andFTSE 250-listed AA exceed 40 percent of thefirms' respective equity capital.
Analysts at investment bank UBS say they have been fieldingcalls since Britons voted to leave the European Union in a June23 referendum from clients looking for guidance on companiesmost exposed to the trend.
Pension schemes skidded back into focus in Britain after thecollapse in April of department store BHS, which went intoadministration with a 571 million pound pensions deficit.
"Deficits will become increasingly important to investors asyields continue to fall," said David Moss, head of Europeanequities at BMO Global Asset Management.
He cited telecoms company BT as a "classic example"of where investors can be put off buying a stock because of aballooning pension deficit.
BT's deficit has risen by 50 percent to 10.6 billion poundsin the last 18 months, according to analysts at Macquarie.
BT did not respond to a request from Reuters for comment.
HUNT FOR YIELD
Firms are required to assess pension valuations regularly,usually every three years, and recent developments will haveworsened funding for many, said Sarah Brown, senior consultantat Punter Southall.
Bond yields, already near record lows, were compressed evenfurther as investors flocked to safe-haven debt in the aftermathof the Brexit referendum.
An expected cut in interest rates from the Bank of Englandto dampen the economic fallout from the shock vote is likely topush them even lower.
"The continued erosion of interest rates over the past 12years has already hit pension schemes hard," said Andy Green,Chief Investment Officer at Hymans Robertson. "And the situationcould get worse over the coming months if the Bank of Englandchooses to lower rates even further."
A Reuters poll showed the BoE would cut rates on Thursday.
Companies calculate their liabilities to pensioners using a"discount rate", based on the yield on AA-rated corporate bonds.
Those with sizeable deficits could be forced to set asidemore money to fund pensions, reducing the sums available for newinvestments, or to raise capital, which risks stretching balancesheets.
Contacted by Reuters, AA and G4S said they were bothcurrently conducting triennial reviews into their deficits.
BAE Systems said the company has already put in place aregulator-approved plan to deal with its pension deficit.
BAE's shares have rallied more than 16 percent from theirBrexit lows, partly on the back of investors buying shares ofcompanies with significant offshore revenues.
British Airways parent International Airlines Group said on July 1 it had missed a deadline for agreeing on a planto fill its multi-billion pound deficit, underscoring thechallenges some companies face. http://bit.ly/29NuguM
MIND THE GAP
Some 84 percent of all UK pension schemes were underfundedat the end of June, according to the Pension Protection Fund,with the total deficit hitting a record 383.6 billion pounds($509.57 billion).
Falling bond yields make plugging the gap much harder.Yields on 10- and 30-year gilts are close to record lows.
UBS estimates that a 1 percent fall in gilt yields increasespension liabilities for the FTSE 100 by 10 percent but warnsthat the impact on individual companies could be much worse.
The broker identifies UK industrials as the most at risk onrising pension liabilities, along with utilities and telecoms.
"It is always good to think about because it is a balancesheet issue," said Andrew Parry, head of equities at HermesInvestment Management. "Companies with pension deficits oftenhave bad balance sheets."
The drop in sterling, which increases the cost of importinggoods and services, could stoke UK inflation, analysts andeconomists have said. This would pile even more pressure onpension deficits, Deutsche Bank warns.
($1 = 0.7528 pounds) (Additional reporting by Carolyn Cohn; Editing by CatherineEvans)
