Corporate pension deficits increase
The UK’s corporate defined benefit pension deficit ballooned by 14 per cent in July to £587bn, up from £513bn in June, according to figures from Xafinity.
Hugh Creasy, director of Xafinity corporate solutions, said pension liabilities grew to £1.6bn in July, nearly £100bn more than the £1.5bn June figure and a 20 per cent increase year on year.
Companies are expected to report a 65 per cent hike in their pension deficit in December, and corporate profits are expected to be hit by lower returns on pension schemes and higher interest charges as a result of larger deficits.
Mr Creasy said: “For four months we have seen stagnation of the deficits at over half a trillion pounds, which was alarming enough for companies. The recent crash in corporate bond yields could spell disaster.”