Defined benefit deficits across UK private sector pension schemes have decreased to £105bn from £180bn last year.
JLT Employee Benefits’ monthly index, which shows the funding position of UK private sector DB schemes under the IAS 19 standard accounting measure, shows that pension deficits at FTSE 100 firms dropped to £24bn from £52bn between February 2017 and 2018. Deficits at FTSE 350 companies also decreased to £32bn from £63bn.
Funding levels across all UK private sector schemes increased to 94 per cent from 90 per cent during the same period.
As at February 28 2018, JLT Employee Benefits estimates the total DB pension scheme funding position as follows:
The corresponding 2017 figures are as follows:
Charles Cowling, director at JLT Employee Benefits, noted that markets have been reasonably benign for pension schemes this month and overall reported pension deficits have continued to drift downwards.
However, he said that “this positive picture masks ongoing challenges for a number of companies with large pension schemes”.
He said actuarial valuations currently being conducted are likely to show a need for significant increases in cash funding.
“This will come as a difficult message for both schemes and sponsors, at a time when the tension between funding deficits and paying dividends to shareholders has already spilled over.”
