In particular, TPR executive director Andrew Warwick-Thompson said attention-grabbing reports of deficits as high as £1.5trn were misleading. A more realistic figure, he said, was £350bn to £400bn.
Speaking at a debate hosted by pensions consultancy Hymans Robertson, Mr Warwick-Thompson said: "Figures being bandied around really are quite scary. I’ve seen numbers as high as £1.5trn. And these appear to be based upon a buyout."
He conceded that annuity buyout rates - that is, the cost of passing the entire scheme liabilities on to an insurance company - had indeed skyrocketed in line with plunging bond yields.
But he pointed out that most DB schemes did not invest exclusively in bonds.
“It’s very important to remember that pension schemes don’t have to invest only in bonds, or in bonds at all if they don’t want to. They have the freedom to choose and adjust their investment strategies.
"And they can invest in a very wide range of assets - pretty much anything they want to. So equities, property, infrastructure are common. And they also use derivatives as a way of hedging.”
He said TPR calculated deficits on a scheme-specific basis.
"Based on the information we have … we think the true scheme specific deficit is somewhere between £350bn and £400bn.”
He added that, depending on the way it was calculated, it could be as high as £600bn, but was certainly not as high as £1.5trn.
“We think the vast majority of employers will be able to fund their schemes sufficiently to meet their liabilities as they fall due," he said, adding there was "no evidence whatsoever" that the Pension Protection Fund would be overwhelmed.
Patrick Bloomfield, partner at Hymans Robertson, agreed, saying designing policy based on over-blown deficit figures and the failure of a handful of high-profile schemes would risk "destroying" the entire DB sector.
"The situation at the moment is a vast oversimplification. Sponsor default is dominating headlines, dominating policy decisions, and we see this as being a minority off to the side," he said.
"They do need different regulation, they are in a special situation, but if we go about creating an entire regulatory and legislative structure to deal with the outliers, we will destroy the proper functioning of most pension schemes in doing so."
The comments came as the Work and Pensions Select Committee's continued its inquiry into the DB sector.
Committee chair Frank Field has taken a more pessimistic view of the outlook for DB schemes, arguing plans must be put in place to allow stressed schemes to reduce member benefits before falling into the PPF.
On Wednesday, the committee was warned that allowing schemes to do this on a "blanket" basis could lead to companies to take advantage, reducing benefits they could afford.
Others, however, have supported the move.
james.fernyhough@ft.com
