Pension schemes in suplus despite volatile year

Almost one half of UK pension schemes are now in surplus despite a volatile year.

Overall, there was a significant improvement in pension scheme funding in 2007, according to Aon Consulting’s Monthly FRS17/IAS19 Tracker: December 2007. Accounting deficits gained £38bn over the year, which brings the last two years of gains to £70bn. Almost half of UK schemes are now in surplus.

Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “2007 [was] a year of mixed fortunes. Pension scheme finances have improved dramatically but they have also experienced extreme levels of volatility.

“From a long-term perspective, 2007 will be remembered as the start of the era of pension scheme surplus. Although there may be pitfalls along the way, stronger funding measures are likely to mean that pension scheme accounting surpluses will persist.

“Short-term financial measures, however, have posed a real headache. Turmoil in the financial markets, whether emanating from China in February or the credit crunch that started in the summer, has produced dramatic swings. Over the year, the aggregate deficit has been as low as £50bn, while it has also reached a peak of £12bn. Such volatility has tested the resolve of even the most hardened long-term investor.”