Private sector pension scheme deficits have surged more than 50 per cent to record levels of £390 billion in the past 12 months amid increasingly challenging conditions, new data out today shows.
The total UK private sector defined benefit pension scheme deficit as at end-July, 2016 has shot up by £135bn compared with a deficit of £255bn in July 2015, according to the latest monthly update from JLT Employee Benefits (JLT), the worldwide employee benefits-related advice group.
Britain’s blue-chip FTSE 100 companies saw their combined defined benefit (final salary) pension deficit jump to £136bn as of yesterday compared with £81bn a year ago.
Charles Cowling, Director, JLT Employee Benefits, commented: “Pension scheme deficits have once again soared to record levels.
“Markets may have recovered, following their initial dive, in the aftermath of the Brexit vote but conditions remain challenging for pension schemes.
“With hints of a rate cut on 4 August, at the next Bank of England’s meeting, it looks increasingly likely that record low rates are here to stay.”
Final salary scheme deficits at FTSE 350 companies, which widens the net to include big as well as the biggest publicly quoted British businesses, leapt to £156bn in July 2016 from £92bn a year ago.
Cowling said companies with actuarial valuations this year faced most pressure as pension trustees will press them to use “all the levers available to them to reduce pension shortfalls”.