Defined benefit pension hole deepens to over £380bn following Brexit vote, according to pensions lifeboat figures

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How is the pensions world going to dig its way out of this one? (Source: Getty)

The hole in the UK's pension pots became much harder to fill last month, according to figures released today by the pensions lifeboat.

The numbers from the Pension Protection Fund revealed that, based on its calculations, the aggregate deficit across 5,945 defined benefit (DB) pension schemes had jumped from £294.6bn at the end of May to £383.6bn at the end of June.

The most recent figures also represents a worsening year-on-year, as the combined deficit was just £209.6bn at the end of June 2015.

The funding ratio across the schemes has also worsened between May and June this year, going from 81.5 per cent to 78 per cent.

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Across the schemes, of which 4,995 are currently running a deficit and only 950 are in surplus, total assets were £1.4 trillion, compared with total liabilities of £1.7 trillion.

The sudden slip can be at least partly explained by heightened volatility in the equities market following last month's Brexit decision, along with falling levels of gilt yields.

"UK pension scheme funding has never been in a more perilous state," said Andy Tunningley, head of UK strategic clients at BlackRock.

Tunningley added: "Our long held view is that most pension funds are exposed to too much interest rate risk and should be increasing their liability hedge ratios. We believe that recent events make this even more critical."

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Meanwhile, Jon Hatchett, head of corporate consulting at Hymans Robertson, told City A.M. that, while the sudden growth in the deficit following the referendum vote was "not surprising", "there will be winners and losers" as some schemes are better hedged against certain risks than others.

Figures released by Hymans Robertson at the end of last month showed that the deficit position across the UK's DB schemes had worsened by £80bn by midday on Friday 24 June.

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