Pensions - Articles - FTSE 350 pension deficit narrows to GBP17bn

Mercer’s Pension Risk Survey data shows that the accounting position of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies improved by £19bn in November, with the deficit falling from £36bn to £17bn.

The improvement in funded status partially reverses the significant shift back into deficit in October, from a £3bn surplus in September. Liabilities have fallen from £795bn to £767bn due to an increase in corporate bond yields and a fall in market implied inflation. Asset values fell from £759bn to £750bn.The quoted funding level increased from 95% to 98%.

Adrian Hartshorn, Senior Partner at Mercer said: “This month’s improvement in the funded status is welcome after the significant impact of the Lloyds High Court judgment in October. However, there is still a considerable gap to bridge before pension schemes can return to surplus. Trustees should remain prudent, seek to lock in gains and ask themselves how much risk they need to take to meet their funding requirements.”

LeRoy van Zyl, DB Strategist and Partner at Mercer, added: “This is a meaningful reduction in the deficit but, as we approach the end of the year and as the Government attempts to get the Brexit Withdrawal Agreement through Parliament, Trustees should evaluate the potential impact of political uncertainty on their sponsor’s financial security and put themselves in a position to capitalise on de-risking opportunities as they arise.”

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