Defined Benefit  

FTSE 350 pension gap grows by £4bn

FTSE 350 pension gap grows by £4bn

The accounting deficit of defined benefit (DB) pension schemes for FTSE 350 companies increased from £41bn to £45bn at the end of February, according to Mercer.

The move was caused by an increase in liabilities from £806bn to £811bn, partially offset by asset values increasing from £765bn to £766bn, the human resources consulting firm reported.

Maria Johannessen, partner at Mercer, said: "It is disappointing to see the pension gap increase in February, having held steady in January.

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"A £1bn increase in asset valuations wasn't enough to offset a big rise in liabilities driven by an increase in market implied inflation alongside a small fall in corporate bond yields.

"The rising deficit reinforces how important it is for trustees to manage risk and shield themselves from market movements."

Mercer's data relates to about 50 per cent of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their corporate accounts.

The data underlying the survey is refreshed as companies report their year-end accounts.