FTSE 350 defined benefit pension deficit rises to £57 billion in May 2019


The accounting deficit for defined benefit (DB) pension schemes at the UK’s top 350 organisations increased by £5 billion between April 2019 and May 2019, rising from £52 billion to £57 billion, according to research by Mercer.

The Pension risk survey, which analyses the pension deficit calculated using the approach FTSE 350 organisations have to adopt for their corporate accounts, also found that liability values increased by £11 billion in May 2019, totaling £856 billion; the report attributes this to a 0.14% decline in corporate bond yields during the month, although this was partially offset by a 0.03% fall in market implied inflation since April.

Asset values rose by £6 billion between April and May this year, increasing from £793 billion to £799 billion.

Maria Johannessen, partner at Mercer, said: “The FTSE 350 pension deficit continues to hover around the mid-£50 billion range with no significant change over the past three months. We saw a more positive trend with regards to inflation, which declined by 0.08% in May, but the effect of this was mitigated by a 0.14% fall in corporate bond yields.”

Charles Cowling, actuary at Mercer, added: “Recent political developments in the UK and global economic uncertainty means that scheme trustees and sponsors must prioritise risk management. With Brexit uncertainty reaching a new high following Theresa May’s resignation, we expect volatility to persist for the foreseeable future.”