Pension liabilities stable at £507bn, Xafinity

The UK’s defined benefit pension schemes liabilities have shown signs of short-term stability as they remain unchanged in April, the latest figures from Xafinity have revealed.

The deficit remained stable at £507bn in April 2012, with scheme liabilities and scheme assets unchanged at £1,568bn and £1,061bn respectively.

However, the pensions consultancy warned against complacency, saying existing assets allow sponsors to treat these deficits as “tomorrow’s problem”.

It claimed that failure to recognise the magnitude of the deficits could leave sponsors open to very painful cash calls in the future. Companies may now face having to take progressive small steps to resolve the long-term financial management issues without any assistance from the broader financial markets.

Hugh Creasy, director at Xafinity Corporate Solutions, said: “Low gilt yields are causing sponsors and trustees to watch markets with eagle eyes, trying to spot any shifts which betray how much of the surge in funding deficits is just a temporary distortion, and how much is a longer term shift.

“If this trend continues, sponsors will need to take a much more active role in managing their deficits down as the markets may not come to the rescue.”