The total deficit for defined benefit (DB) pensions schemes for FTSE 100 companies has been slashed by £21bn over the course of a year.
According to figures released today by JLT Employee Benefits, the total deficit across FTSE 100 companies stood at £77bn at 31 January 2016, down from £98bn at the same time the year before.
However, during the same time period, DB pension scheme assets held by the FTSE 100 have plummeted from £565bn to £538bn, suggesting that some of the UK's biggest companies are turning their back on the once popular retirement provision.
The situation is similar for business in general, with JLT discovering that the total deficit for DB schemes for all UK private sector pensions had fallen to £252bn at 31 January 2016, down from £283bn a year ago, while assets had dropped to £1.2 trillion from £1.3 trillion.
|Deficit at 31 Jan 2016||Deficit at 31 Jan 2015|
|FTSE 100 companies||£77bn||£98bn|
|FTSE 350 companies||£89bn||£112bn|
|All UK private sector||£252bn||£283bn|
Charles Cowling, director at JLT Employee Benefits, remarked that, thanks to the tumbling oil price, a weakening pound and historically low levels of interest, 2016 looked like a bleak year for DB schemes.
Read more: DB pension schemes deficit edges downwards
"We have already seen many large firms, from Tesco to United Utilities, close down or announce the closure of their DB pension schemes in 2015. It is no surprise therefore that we expect 2016 to be the year that, within the private sector at least, those last few companies still hanging on to their DB schemes will finally throw in the towel and switch over to defined contribution entirely for employee pension provision."
Last year, JLT released research showing that only 23 FTSE 100 firms were incurring ongoing DB service costs at a level that indicated they were providing benefits to a significant number of staff.