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UK pension deficits at record year-end level
03 January 2017
Defined benefit pension fund deficits have only partially recovered from record intra-year position despite equity market surge
combined deficit of UK private sector defined benefit (DB)
pensions schemes was £434bn ($533bn) at the end of 2016,
compared to £233bn year-on-year, according to research by
JLT Employee Benefits.
total private sector DB pension scheme assets increased from
£1,225bn to £1,448bn during 2016, liabilities
jumped by a larger amount from £1,458bn to
100 companies’ DB assets increased from
£536bn to £596bn while estimated liabilities rose
from £606bn to £765bn. The deficit of increased
from £70bn to £169bn.
picture was similar for the broader-based FTSE 350. FTSE 350
companies’ assets increased from £605bn to
£675bn during 2016, with liabilities increasing from
£686bn to £866bn. The deficit increased from
£81bn to £191bn.
Cowling, director at JLT Employee Benefits said: "This last
month we have seen a slight deterioration in deficits but they
are still below the record heights of over £500bn
recorded at the end of August, as markets rallied from Brexit
and the US election shocks.
pension scheme deficits are still significantly larger than the
levels at the start of the year and there appears to be no
relief in sight for companies with large pension schemes.
Indeed, these figures represent a record year end deficit
position for companies and their pension schemes."
stressed that companies’ accounts will show a
"market deterioration" in their year-end pension
numbers. "There will be instances where the pension scheme
will represent a serious threat to the company’s
balance sheet and, in some cases, the company’s
ability to pay dividends."