Pensions - Articles - £50bn rise in UK corporate pension deficits

 Hugh Creasy, Director at Xafinity Corporate Solutions, said: “The main focus for pension scheme finances needs to be control over investment risk. Sponsor contributions cannot be expected to make a material impact on balance sheets, at least not in the short to medium term; the state of equity markets is more significant, but again is not the main driver.

 Managing the financial risks of the changing outlook for interest rates and inflation is the greatest control sponsors can have over the size of the deficit on their balance sheet. The use of leveraged bond funds has allowed sponsors to achieve this control and is now well-established in the marketplace. Even inflation risk – for so long the elephant in the room – is now finally being recognised and consciously addressed.

 Controlling these investment risks does not mean the end of the deficit, but it can mean the end of the increases in the deficit.”