Market surge fails to dent pensions deficit

PENSION schemes are "running to stand still" as the stock market recovery has failed to dent deficits, an influential new survey revealed yesterday.

Despite the rise in global equity markets over the third quarter of 2010, FTSE350 company pension deficits have remained unchanged from the previous quarter, says the new data from pensions experts, Mercer. The consultancy said it estimated that the aggregate IAS19 pension deficit for FTSE350 companies stood at 85 billion at 30 September - the same as in June.

However, Mercer said the appearance of stability was misleading, as volatile asset swings meant the aggregate deficit moved by 45bn, hitting a high point of over 100bn in late August and a low of 57bn in July.

Dr Deborah Cooper, head of Mercer's retirement research group, said: "Pension schemes are running to stand still in the face of such volatility. Overall, the fall in bond yields wiped the value of the equity market recovery off company balance sheets.

"Despite companies continuing to make significant contributions to their pension arrangements and improvements in trustees' invested funds, the balance sheet effects at the end of the quarter were the same as at the start."

The FTSE All Share Index rose by almost 14 per cent over the third quarter of 2010.