Pension deficits edge down compared with 12 months ago as a result of "surprisingly stable" markets

Oliver Gill
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The pension scheme of turkey firm Bernard Matthews fell into insolvency after the firm was bought through an insolvency process last year (Source: Getty)

Aggregate UK pension deficits have reduced over the last 12 months, latest research has indicated.

After deficits soared to record levels last year in the wake of the Brexit vote, they have now stabilised year-on-year and are £1bn lower, according to data prepared by actuarial specialists JLT Employee Benefits.

The aggregate deficit of the UK private sector pension schemes stood at £182bn at the end of April, this compared with a deficit of £183bn on 30 April 2016.

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However, the deficit contraction was not replicated among larger firms. The FTSE 350 aggregate deficit stood at £71bn compared with £63bn in 2016 and the FTSE 100 aggregate shortfall was £60bn, £7bn higher than 12 months beforehand,

“Markets have been surprisingly stable at a time of political uncertainty in the UK and across Europe," said JLT Employee Benefits director Charles Cowling.

"As a result whilst pension deficits remain high due to quantitative easing and record low interest rates, they have remained pretty much at their current levels for some time now. This is despite the threat of inflation caused by the devaluation of sterling and rising import prices which is likely to flow through to higher pensions."

Read more: Brexit will make pension deficits harder to manage

The news of pension deficits returning to similar levels seen a year ago comes after Prime Minister Theresa May vowed to crack down on firms that fail to protect pension pots.

The Conservative party manifesto will include a commitment to increase the punishment for pension mismanagement and May told the Mail on Sunday she is also keen to give the Pensions Regulator greater powers to block M&A activities where there is the risk of a pension scheme falling into insolvency.

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