Investment - Articles - FTSE350 Pension deficit rises by five billion pounds in May

Mercer’s Pensions Risk Survey data shows that the accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies increased by £5bn, from £52bn in April to £57bn in May.

 Liability values increased in May by £11bn to £856bn due to a 0.14% decline in corporate bond yields during the period. This was partially offset by a 0.08% decline in market implied inflation since April. Asset values increased by £6bn, from £793bn to £799bn.

 Maria Johannessen, Partner at Mercer, said: “The FTSE350 pension deficit continues to hover around the mid-£50 billion range with no significant change over the past three months. We saw a more positive trend with regards to inflation which declined by 0.08% in May, but the effect of this was mitigated by a 0.14% fall in corporate bond yields.”

 Charles Cowling, Actuary at Mercer, added: “Recent political developments in the UK and global economic uncertainty means that scheme trustees and sponsors must prioritise risk management. With Brexit uncertainty reaching a new high following Theresa May’s resignation, we expect volatility to persist for the foreseeable future.”

 Mercer’s data relates to about 50% 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. Other measures are also relevant for trustees and employers considering their risk exposure. But data published by the Pensions Regulator and elsewhere tells a similar story.

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