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


 UK corporate pension deficits increased by £50 billion to £629 billion in July according to Xafinity’s corporate pension deficits tracker.
  
 The increase is largely due to the fact that the equity market bounce back in July has not been enough to counter the falling bond yields during July. As a result, scheme asset values have increased by £42 billion, but this has been outweighed by growing liabilities on corporate balance sheets, an increase of £92 billion.
  
 The deficits picture has also not been helped by the steady upward ticking in the outlook for inflation over the last few months.
  
                                                                                           
    £ billion     Jul 2013     Jun 2013     Jul 2012
    Scheme Liabilities     1,764     1,672     1,675
    Scheme Assets     1,135     1,093     1,097
    Deficit     629     579     587

 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.”

 
  

Back to Index


Similar News to this Story

Wish list for the occupational pensions industry in 2025
As one year closes and another begins, it's an opportune moment to set our sights on the future. The UK occupational pensions industry faces nume
PSIG announces outcome of Consultation
The Pensions Scams Industry Group (PSIG), which was established in 2014 to help protect pension scheme members from scams, today announced the feedbac
Transfer values fell to a 12 month low during November
XPS Group’s Transfer Value Index reached a 12-month low, dropping to £151,000 during November 2024 before then recovering to its previous month-end po

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.