Pensions - Articles - Month end FTSE 350 pension scheme deficits hit 2 year low

Deficits fell from £69bn to £45bn over the month driven by bond yield increases. Accounting liabilities fall to £784bn while asset values also fell. Pensions Regulator urges Trustees to review their governance and risk management

 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 £24bn over the course of April, standing at £45bn at the end of the month, a decrease from £69bn at the end of March. Liabilities fell from £837bn at 31 March 2022 to £784bn at the end of April driven by further increases in corporate bond yields. Asset values also fell to £739bn compared to £768bn at the end of March.

 Tess Page, Mercer UK Wealth Trustee Leader, said: “The month end position has again shown an improvement month-on-month and is now back at a level last seen in April 2020. The main driver of the change has been the increase in bond yields. These improvements are good news in the current economic environment.”

 Miss Page added: “This week has also seen the Pensions Regulator (TPR) issue its 2022 Annual Funding Statement which highlights TPR’s general expectations of all DB schemes. The Statement emphasises TPR’s expectations for strong governance and robust integrated risk management especially in the context of the current economic and geopolitical situation. Even schemes that have good arrangements in place need to keep them under review, and it is likely that all schemes, even the best prepared, will need to take some action in view of the current climate.”

 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.


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