THE UK’S largest companies face a huge deficit in their defined benefit pension funds which shows no sign of being closed, Mercer’s pensions risk survey revealed yesterday.
Combined deficits of FTSE 350 firms stood at £83bn on 31 January, the study showed, barely changed from the £84bn deficit recorded at the end of December.
Asset values did rise in the month, from £478bn to £487bn, but liabilities also rose from £562bn to £570bn due to a small fall in corporate bond yields which are used to discount liabilities.
“The changes in January highlight a number of factors at play driving the overall funding level,” said Ali Tayyebi, senior partner and pension risk group leader at Mercer.
“Although the FTSE 100 increased by around two per cent over the month, pressure remained on the liability side with double-A corporate bond yields reducing further over the month.”
The survey covers about half of pension scheme liabilities. The pensions regulator’s data showed UK pension schemes as a whole had a shortfall in assets of £471bn in March 2011.
