FTSE 350 defined benefit pension deficit rises to £145bn

The accounting deficit of defined benefit (DB) pension schemes for the UK’s largest 350 organisations rose by £12 billion from £133 billion at the end of March 2017 to £145 billion at 28 April 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 increased by £12 billion, rising from £872 billion at the end of March 2017 to £884 billion at the end of April 2017. Asset values remained consistent between March and April this year, staying at £739 billion.

DB pension deficits fluctuated between £132 billion and £155 billion between the end of March and the end of April. After the announcement of the UK election on 18 April, deficits improved by £4 billion, and after the first round of the French election results, deficits improved by £7 billion.

Ali Tayyebi, senior partner at Mercer, said: “For the first time this year, the deficit exceeded £150 billion, however, following the announcement of the snap general election on 18 April there has been a small recovery. The main change over the month has been a small increase in the market’s expectation for long-term inflation which has ticked up again towards its recent high point at the end of January 2017. We also saw liabilities hit £900 billion on 12 April, the highest level since Mercer started regular monitoring in 2007.”