Pensions - Articles - FTSE 350 pension scheme deficits fall again

 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 fell by £41bn over the course of May, standing at £4bn at the end of the month, a decrease from £45bn at the end of April. Liabilities fell from £784bn at 29 April 2022 to £716bn at the end of May driven by further rises in corporate bond yields offset by a fall in the market’s view of inflation. Asset values also fell to £712bn compared to £739bn at the end of April.

 Tess Page, Mercer UK Wealth Trustee Leader, said: “The aggregate funding position continues to improve, and again the main driver was bond yields, with the market’s long term view of inflation not currently reflecting the immediate price increases consumers are feeling.”

 Miss Page added: “These improvements in funding will help support company balance sheets if conditions hold until their year-end, and we expect a similar result when looking at trustees’ assessment of their schemes. These improvements represent a real opportunity for trustees and employers to lock in funding gains and take risk off the table. Given the current levels of economic and political uncertainty this will be seen by many as a good thing.”

 Mercer’s Pensions Risk Survey data relates to about 50% of all UK pension scheme liabilities, with analysis focused on 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. Data published by the Pensions Regulator and elsewhere tells a similar story.