Crisis in the Eurozone could add 45 per cent to pension deficits

SOVEREIGN default in the Eurozone could hammer pension deficits, research from the Pension Insurance Corporation warned yesterday.

“Should gilt yield fall back 30 basis points and equity markets drop 20 per cent following a sovereign default, deficits could grow by 45 per cent, costing an estimated £190bn,” the calculations showed.

Yet despite the possibility of a second financial crisis, pension insurance “is at its most affordable since the summer of 2008 – just prior to the collapse of Lehman Brothers”, the report said.

“The clear divergence in market outlook between the fixed income markets and the equity markets should be of concern to trustees,” warned David Collinson of the Pension Insurance Corporation.