FTSE 350 defined benefit pension deficit falls to £122bn


The accounting deficit of defined benefit (DB) pension schemes for the UK’s largest 350 organisations fell from £131 billion at the end of June 2017 to £122 billion at 31 July 2017, according to research by Mercer.

Its Pensions risk survey, which is based on projections and analysis of FTSE 350 organisations’ financial statements adjusted from their financial year end, also found that liability values decreased by £4 billion between the end of June 2017 and the end of July 2017, falling from £869 billion to £865 billion.

Asset values increased by £5 billion from £738 billion at the end of June 2017 to £743 billion at the end of July 2017.

Ali Tayyebi (pictured), senior partner at Mercer, said: “The welcome trend of improvements in the deficit over recent months continues during July. This was largely driven by a small reduction in market expectations for long-term inflation which reduces the pension liability values. An increase in asset values also helped to further improve the funding deficits over July.

“As past experience has shown, periods of steady improvements can be reversed quickly. The most important question for most pension schemes should therefore be about getting the right balance between protecting improvements in the funding position and relying on continued out-performance from risk-based or unmatched asset strategies.”