Pension liabilities rise to more than £1.2 trillion, says Aon

Steve Dinneen
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Pension liabilities for UK private sector final salary schemes have hit a staggering £1.2 trillion, as market conditions continue to deteriorate.

This represents a 20 per cent increase since the landmark £1 trillion figure was hit in August 2009.

According to Aon, which tracks roughly half of the UK’s private sector pension scheme liabilities, market conditions are continuing a downward spiral.

A spokesman said: “The main cause of the increased value placed on the schemes’ liability is the fall in the yield available on government securities.”

He added: “The lower yields are a product of the weak and slowing world economy, very loose monetary policy as credit conditions remain tight, and the flight to safety effect from abroad due to problems in the Eurozone.

“The government bond yield is used as a benchmark for assessing pension scheme liabilities. The 20 year government gilt yield has dropped to 3.76 per cent, a level at which it has only been once before during the last ten years.”

The top 200 pension schemes accumulated liabilities of £608bn in August and a deficit of £97bn, up from £74bn at the end of July and £78bn at the end of August 2009.