Pensions - Articles - Pension deficits jump by £100 billion in August

 The aggregate IAS19 deficit for UK corporate pension schemes has increased significantly, up a further £100 billion, in August and now stands at £729 billion according to Xafinity’s corporate pension deficits tracker; this is substantially higher than even recent times, as the table below demonstrates.

 The increase is largely due to the worsening outlook for price inflation with a greater appreciation of its ability to erode pension scheme finances than just 12 months ago. 

 Source: Xafinity Corporate Pensions Scheme model, based on all UK DB pensions and using FRS17 and IAS19 accounting rules

 Hugh Creasy, Director at Xafinity Corporate Solutions, said: “Pension schemes have access to a range of options for managing price inflation risk. Those who have successfully hedged will be far more comfortable than those who have not. This is not a time for Schadenfreude though. At this level, the aggregate deficit corresponds to six months of the UK’s entire GDP. Of course the deficit will wax and wane over time, but at this level it simply cannot be ignored. Looking to shorter term realities, September traditionally marks the start of the run up to year end planning for finance teams. Today’s news will make unwelcome reading for those yet to address the core financial risks in their pension schemes.”