The estimated aggregate deficit for the defined benefit (DB) pension schemes of FTSE 350 companies stood at £102 billion at 31 October 2013, according to research by Mercer.
Its Pensions risk survey found that asset values increased by £13 billion over the month, from £553 billion at 30 September 2013 to £566 billion at 31 October 2013.
Liability values also increased by £19 billion over the month, from £649 billion at 30 September 2013 to £668 billion at 31 October 2013.
Ali Tayyebi (pictured), head of DB risk in the UK at Mercer, said: “It will come as a surprise to many that despite the visibly strong asset returns over the month, deficits have still increased compared to the position at the end of September.
“The increase in UK equity values by more than 4% helped overall asset values increase by £13 billion over the month.
“However, a further narrowing of credit spreads has resulted in an increase in the value places on IAS19 accounting liabilities. Looking ahead, for companies that have 31 December year-ends, the stubbornly high accounting deficits will have a detrimental impact on earnings for 2014.”
Adrian Hartshorn, senior partner in the financial strategy group at Mercer, added: “With improving funding levels on the trustee funding measure there is an increased focus on locking in some of the gains.
“Implementation of risk reduction strategies requires careful thought and planning in a market where there is divergence in return prospects for different asset classes.”