FTSE350 defined benefit pension deficit hits £92bn

Pay salary money wage 430The accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed organisations reached £92 billion at the end of April 2016, according to research by Mercer.

Its Pensions risk survey, which is based on analysis of pension deficits using data from reported financial statements and year end reports, also found that the accounting deficit has increased by £11 billion, up from £81 billion at the end of March 2016.

There was a £2 billion fall in asset values, from £657 billion at 31 March 2016 to £655 billion at 29 April 2016. Liability values saw a £9 billion increase, with figures in March at £738 billion reaching £747 billion by the end of April.

Le Roy van Zyl, principle in Mercer’s financial strategy group, said: “April has been a mixed month for pension schemes’ financial position, with the funding deficits pension scheme trustees focus on improving, but accounting results for sponsors deteriorating.

“With funding deficits significantly recovered from February, it is tempting to say that the worst has passed. But it is very difficult to express any degree of confidence about this.

“There are a number of political and economic narratives, such as Brexit uncertainty, that can significantly impact financial positions, and there should be particular focus on consideration of locking in some of the recent gains or being prepared to do so if conditions improve even further.”