Sunday 3 April 2016 4:43 pm

Defined benefit pension funding level fails to improve for FTSE 350 firms

The deficit carried on defined benefit (DB) pension schemes by FTSE 350 companies has barely budged over the last year, according to figures released late last week.

The study by JLT Employee Benefits discovered that, at the end of March 2016, FTSE 350 firms only held assets that covered 86 per cent of the liabilities of their DB schemes, the same proportion of coverage achieved at the end of March 2015.

The deficit across DB schemes for FTSE 350 companies stood at £101bn at the end of last month, based of assets of £616bn and liabilities of £717bn.

The proportion of liabilities funded across DB schemes for all private sector companies had edged down slightly, going from 83 per cent at the end of March 2015 to 82 per cent at the end of March 2016, and the overall deficit amount had grown from £268bn to £273bn.

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"Pension scheme deficits remain sky high, despite some recovery in equity markets," said Charles Cowling, director at JLT Employee Benefits. "Successive reforms introduced by chancellor George Osborne are threatening to make pensions an endangered species.

"The changes to the lifetime and annual allowances have made pensions almost irrelevant for high earners; Freedom and choice is encouraging people to cash in their pensions; and most recently pensions have become far less attractive for the under 40s in comparison to the Lifetime ISA. It is easy to see why some are saying that George Osborne has a long-term unspoken strategy of getting rid of pensions altogether."