UK pension deficits fall by £100bn over the last year to pre-Brexit vote levels

Oliver Gill
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British Airways pension scheme has cost the airline billions since 2003 (Source: Getty)

Pension deficits at UK companies have fallen by £100bn over the last year, below pre-Brexit vote levels, according to research released today.

The aggregate shortfall of FTSE 350 retirement schemes stood at £65bn at the end of September. This compares with £165bn at the end of August 2016.

Pension liabilities fell by more than £1bn a day last month, in figures compiled by actuarial firm Mercer.

"[Deficit falls have] largely been driven by a rise in yields on long-dated corporate bond which have in turn reduced the calculation of liabilities used for reporting pension scheme deficits in companies’ accounts," said Mercer senior partner Ali Tayyebi.

Read more: BT multi-billion pound pension bill threatens dividend

Falling deficits are likely to come as a blessing to firms managing unwieldy bumper pension deficits.

BT is in talks with its pension trustees over managing more than £50bn of pension liabilities. Meanwhile, British Airways owner IAG is attempting to shut its pension scheme, which costs the airline over £700m in contributions each year.

“The good news on funding levels may have come as a welcome surprise to trustees and sponsors, and it is clear that careful thought needs to be applied on how far to consolidate the position," said Mercer partner Le Roy van Zyl.

Read more: Pilots left "bitterly disappointed" as British Airways scraps pension pot

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