Pensions - Articles - Pension deficits increase by £84billion as bond yields slow


 UK corporate pension deficits rose by £84billion to £695 billion in April according to Xafinity’s corporate pension deficits tracker, adding to the previous month’s rise, resulting in deficits nearing £700bn. 

 The increase in deficits during April is because the expected rate of increase for bond yields is now slower than estimated in March, adding £100 billion to the IAS19 liabilities.

 

 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: The crumb of comfort is that this has come after 31 March. The often criticised “snapshot view” has come to save the majority of businesses who report as at 31 March. The gradual progression of deficits during the last few years, however, will mean that few will feel able to ignore this continuing increase in deficits as simply some sort of blip.

 Finance Directors need to be considering: how likely is it that there will be upward expectations for borrowing costs over the remainder of the financial year? The longer base rates are expected to remain low, the larger they can expect their pension scheme deficit to be.

 Meanwhile, the threat of inflation continues to lurk in the wings. While this has been relatively quiet during 2013, it would now just take an increase of little more than 0.25% in the outlook for inflation to send reported pension costs past the £2 trillion mark.”
  

Back to Index


Similar News to this Story

TPRs oversight of largest DC schemes is evolving
Master trusts, some of the UK’s biggest defined contribution (DC) schemes, will be supervised differently to identify market and saver risks sooner an
Pension disengagement may cost you GBP500k in retirement
Failing to actively engage with pensions during one’s working life could have a staggering financial impact, according to a new report from PensionBee
Ongoing confusion over IHT proposals and pension priorities
Sacker & Partners LLP (Sackers), the UK’s leading specialist law firm for pensions and retirement savings, today announced the results of their most r

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.