Pension scheme deficits soar to £80bn in November

Pension scheme accounting deficits stood at £80bn at 30 November, representing a major deterioration from £60bn at 31 October, according to Mercer.

This represented a three per cent fall in the funding levels over the month from 89 per cent to 86 per cent, despite the sharp rally in share prices following the central bank intervention announced on 30 November.

Before the intervention funding levels hit 83 per cent earlier in the month.

Ali Tayyebi, senior partner and pension risk group leader of Mercer, said: “As well as the month-on-month fall in the accounting deficit there was considerable intra-month volatility, with funding levels falling by as much as 6 per cent at one point during the month.

“We are beginning to see the bad economic news catch up on the accounting numbers which had so far been relatively protected in the midst of the general economic turmoil.

“The relentless fall in Gilt yields, due to the eurozone debt crisis and quantitative easing the UK, is now also pushing down the real yield on high quality corporate bonds.

“If 30 November conditions are mirrored at 31 December then many companies will be seeing an increased deficit on their balance sheet at the year end.”