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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.

By Chen Liang | Published Aug 06, 2012 | comments

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.”

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