Pensions - Articles - DB pension funding update - JLT

 As at 31 May 2016, JLT estimates the total DB pension scheme funding position as follows:

 Charles Cowling, Director, JLT Employee Benefits, comments: “Pension scheme deficits have reached record levels, with the total deficit for all UK private sector pension schemes exceeding the £300 billion mark for the first time in May. Conditions are getting ever more challenging for pension schemes with prolonged low interest rates and uncertainty in the markets ahead of the EU referendum.

 “The Government is currently consulting on the possibility of allowing benefits to be reduced in extreme circumstances, but this is unlikely to help most hard-pressed companies which can’t seem to keep deficits from spiralling despite pumping ever more cash into schemes and taking action to reduce pension risks.

 “There isn’t too much prospect of imminent relief from markets either, as the nervousness surrounding the EU referendum is causing short-term volatility. With interest rates looking to stay low for some time yet, it seems unlikely that pension schemes will benefit from either an exit or a remain vote.

 “Whilst companies should look to continue to seek opportunities to reduce risk and settle pension liabilities, they may wish to wait until after 23 June when there may be greater clarity on the shorter term outlook for markets.”