The total collective deficit of the UK’s defined benefit pension schemes soared by almost £90bn between May and June, to hit £383.6 billion at end of the month, the Pension Protection Fund has reported.
That brought the total number of schemes in deficit to 4,995, representing 84 per cent of the 5,945 schemes monitored by the lifeboat fund.
Just 950 schemes were in surplus.
It was a radical deterioration from June 2015, when the collective deficit was just over £200bn.
Now it is pushing £400bn.
The aggregate balance has now been in negative territory for more than five years.
Between May and June 2016, 29 new schemes went into deficit.
While the PPF report did not mention Brexit as a cause for the dramatic deterioration, it put the increase in deficits down to falling gilt yields, which most commentators agree is a result of the decision to leave the EU.
Since the referendum, gilt yield have plummeted to record lows.
Responding to the PPF’s figures, a statement from Hargreaves Lansdown said the figures showed “how the UK’s pension system has been hit by Brexit”.
The firm’s head of reitrement Tom McPhail said the UK’s “gold-plated pension system” was “starting to look tarnished”.
“Deficits are soaring, employers are reneging on their promises and still more money is needed.”
He went on: “Companies are having to divert profits into schemes to make good on their promises, which means less investment capital to help businesses grow and less money available to invest in the pensions of younger workers.”
He said there was “a growing argument” for a “more balanced approach” to funding retirement.
He said that one solution would be to link annual benefite increases to the consumer price index rather than the retail price index - an idea the government is already exploring in the context of the British Steel Pension Scheme.
The Work and Pensions select committee, chaired by Frank Field MP, is planning its own inquiry into the issue.
james.fernyhough@ft.com
