Pensions - Articles - JLT EB pension monthly update

 As at 30 April 2015, JLT estimates the total DB pension scheme funding position as follows:

  

 

 
 Charles Cowling, Director, JLT Employee Benefits, comments:

 “The ballooning of defined benefit pension deficits continues, with the burden on UK private sector employers increasing by £90bn over last 12 months. The long term impact of low interest rates coupled with improving longevity is continuing to pile the pressure on DB schemes – particularly those with an actuarial valuation in 2015. This can quickly become unsustainable, and the closure of Tesco’s DB scheme – one of the largest in the UK private sector – could lead many others to follow suit.”

  

 “Meanwhile, the General Election next week and its uncertain outcome will have a medium term impact on the financial markets as well as the overall economy. This could have negative repercussions for pension investments and sponsors’ ability to fund deficits.”

  

 “Despite the relative gloom, there may be some good news on the horizon. It is still early days for the Freedom and Choice reform and it is too soon to observe any substantial effects. But it may offer some hope for DB schemes if enough members transfer DB benefits to DC schemes to take advantage of the new flexibilities.”