The combined pension deficit of Britain’s defined benefit (DB) pension schemes worsened by almost half during the month of December, last year.
The Pension Protection Fund (PPF) estimates the aggregate funding position of almost 7,800 DB schemes has worsened by 43% to a deficit of £194.5 billion at the end of December 2008.
That is a fall of £58.5bn in just one month, down from a deficit of £136 billion at the end of November 2008.
For those schemes in deficit, their total deficit worsened by £55 billion during the month of December to £209.6 billion, while the total surplus of schemes in credit also fell by £3.9 billion to £15.1 billion at the close of the month.
The figures paint a bleak picture compared to the same period last year, when aggregate figures show a combined surplus for all DB pension schemes of £11.7 billion in December 2007.
The key drivers for the deteriorating funding position have been falling asset values through 2008 and the increasing liabilities – the latter being driven by falling gilt yields, said Tom McPhail, head of pensions research at Hargreaves Lansdown.
“If the government bond bubble bursts then that could bring some relief to these valuations but in the short term the situation could well get worse before it gets better” he said.
“The year 2009 will be critical for final salary schemes and for the PPF; we may need to throw some more fixtures and fittings overboard in order to keep the boat afloat.”