Defined BenefitMay 9 2017

Defined benefit pension scheme deficits rise to £246bn

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Defined benefit pension scheme deficits rise to £246bn

Deficits in defined benefit schemes are on the rise again, according to the latest figures from the Pension Protection Fund.

The aggregate deficit of the 5,794 schemes in the PPF 7800 Index has risen to £245.6bn at the end of April 2017.

This is from a deficit of £226.5bn at the end of March 2017.

The funding ratio deteriorated from 87.0 per cent at end March 2017 to 86.0 per cent. 

Total assets were £1.5trn and total liabilities were £1.7trn, with 391 schemes in deficit and 1,403 schemes in surplus.

Le Roy van Zyl, partner at the actuarial firm, Mercer, commented: “The deterioration in funding levels over April was a reminder that pension scheme trustees and sponsors face significant uncertainties.

"Even though some markets showed some weakness, other areas are strong to the point of being at significant risk of suffering a set-back in the near future. 

On the positive side for pension funds, Charles Cowling, director at JLT Employee Benefits, said:  "The latest mortality tables from the CMI suggest that life expectancy is perhaps not increasing as much as had been expected and this will reduce deficits.

"But with many pension schemes now embarking on their triennial actuarial valuations and deficits likely to be much bigger than three years ago there are going to be some difficult discussions between companies and pension scheme trustees, as trustees could be looking to negotiate significant increases in deficit funding.”