Pensions - Articles - FTSE350 pensions deficits rise due to yields and inflation

 “Our recent survey with the CBI highlighted that employers continue to feel weighed down by the cost of managing DB pension schemes. This month’s data reinforces the challenges still faced by many schemes despite positive momentum on the asset side,” said Tess Page, UK Wealth Trustee Leader at Mercer: “Inflation remains above the Bank of England target, and implied future inflation is also elevated.

 “In a week when focus is rightly on climate change, this is a timely reminder that interest rates and inflation remain top of the risk list for many pension schemes. Along with planning their climate change risk strategy, Trustees should consider reviewing their approach to hedging assets and liabilities to ensure their strategy remains optimal.”

 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.