PENSION funds weathered the recent falls in equity markets to significantly reduce their deficits last month, though shortfalls remain at worrying levels.
The total deficit for the largest 200 private pension schemes dropped by £13.5bn last month, the biggest improvement since June 2009, according to human capital and risk management firm Aon Consulting.
The total shortfall for the funds stood at £83.5bn by the end of May, more than double the deficit of May 2009 but down from a record high of £97.2bn in April.
The liabilities of final salary pension funds have been eased by expectations of long-term low inflation, meaning earnings-linked pensions will pay out less.
Sarah Abraham, consultant and actuary at Aon Consulting, said: “News of a reduced deficit – although its scale is daunting – will be greeted with some cheer.”