On the go: Defined benefit schemes sponsored by FTSE 350 companies saw their deficits rise to £87bn in August, an increase of £2bn from £85bn in July.
According to Mercer’s pension risk survey, the increase in figures was driven by a £6bn rise in liabilities, which stood at £934bn at the end of August, up from £928bn at the end of July.
This hike was caused by an increase in market expectations for future inflation offset by a rise in corporate bond yields, the consultancy stated
On the other hand, assets rose by £4bn, to £847bn at the end of August from £843bn in July.
Commenting on the figures, Tess Page, UK wealth trustee leader at Mercer, noted that despite the strong economic growth in recent months, the global economy faces challenges ahead.
She said: “Covid-19 is back on the rise in many regions, and in the UK the winding down of government support may weigh on growth.
“The past month saw fairly small changes to aggregate funding levels, but the course ahead could well be a choppy one. Schemes with clear integrated risk management strategies will be well-prepared for the future.”
Despite the negative results for FTSE 350 pension funds, the figures improve when considering the total universe of corporate DB schemes in the UK.
The PwC pension funding index showed a surplus of £20bn for the 5,300 DB schemes analysed in August, an increase of £10bn when compared with the previous month.
With £1.85tn in assets and £1.83tn in liabilities, these schemes had a funding ratio of 101 per cent in August.
