FTSE 350 defined benefit pension deficit falls to £67bn

ali-tayyebi-defined benefit pension

The accounting deficit for defined benefit (DB) pension schemes for the UK’s 350 largest organisations decreased from £68 billion at the end of September 2017 to £67 billion on 31 October 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 have increased by £7 billion to reach £832 billion at 31 October 2017, compared to £825 billion at the end of September 2017.

Asset values increased by £8 billion between the close of September and the end of October 2017, rising from £757 billion to £765 billion.

Ali Tayyebi, senior partner at Mercer, said: “Deficits remained largely unchanged over the month despite a £8 billion increase in asset values. This was mainly due to an increase in long-term market expectations around inflation which contributed to liabilities increasing by a broadly similar amount.

“The market’s view on inflation has increased gradually over the last two months, but it still remains slightly lower than the level reached at the end of January this year. The Bank of England announcement on increasing rates has been expected for some time, but it remains to be seen how inflation develops over the coming months and what impact this will have on pension schemes.”