Pensions - Articles - Latest monthly funding update from JLT Employee Benefits

 As at 31 August 2015, JLT estimates the total DB pension scheme funding position as follows:
  

 Charles Cowling, Director, JLT Employee Benefits, comments: “These latest figures on the pension deficits within UK Private Sector Schemes, showing a total deficit of £248bn, up from £212bn a year ago, highlight the continuing challenge of managing DB pension risks. The volatile numbers reflect the fragile nature of our economic recovery, as well as the effect of tight global interdependence of markets. This was recently brought to light by the recent crash of Chinese equities and the ongoing Greek drama.

 “The problems in China and Greece won’t go away in the near term. The last bailout deal with Greece didn’t solve the fundamental problems of its large pile of debt, but was yet another stratagem to kick the can down the road. Meanwhile, China has got its own profound issues. Being the second largest world economy, its struggles to maintain growth will have a considerable ripple effect on other nations near and far.

 “With just under half of DB pension assets still invested in equities, schemes are exposed to a huge amount of market volatility, potentially leading to big losses that can further widen the deficit gap.

 “It is in times like these that the risks to our pension funds become evident. For some, this kind of exposure is more than they can reasonably tolerate on their balance sheet. Last week’s events should be a rude awakening for trustees to look into the amount of risk they hold and explore any opportunity to de-risk their pension scheme.”