The accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies increased to £103bn on 31 July, up from £90bn at the end of June, according to new data from Mercer’s Pensions Risk Survey.
Mercer also revealed that liability values saw a rise of £13bn to £970bn at the end of July, in comparison to £957bn at the end of June. The data showed that asset values were £867bn during the month, a figure unchanged since the end of June.
The Pensions Risk Survey data relates to about 50% of all UK pension scheme liabilities, with Mercer’s analysis focused on pension deficits calculated using the approach that companies have to adopt for their corporate accounts.
Mercer chief actuary, Charles Cowling, commented: “Pension scheme deficits worsened again in the last month and compared to 12 months ago, as market turmoil continues.
“We may have reached the limit of the easing of lockdown measures ahead of any vaccine for coronavirus becoming available, and globally the outlook remains bleak with coronavirus cases increasing.”
Cowling also suggested that many sectors in the UK are still operating in “crisis mode” and highlighted that some experts have predicted it will be 2024 before the UK economy returns to normal.
“Meanwhile, the economy is expected to shrink by over 10% this year due to the winding down of the furlough programme and unemployment could get close to 10% by year end,” he added.
“These are testing times for trustees who, more than ever, need to understand the financial challenges facing sponsoring employers. Focus will be on the Bank of England this week as it meets to review interest rates.
“Although a change to base rates is unlikely, it seems that markets are already pricing in a cut to negative rates and the Bank is expected to publish a report on the prospect of negative rates. Now is not the time for pension trustees to be increasing investment risk. Rather, where possible, trustees should consider reducing risk, taking market opportunities to increase hedging programmes and contemplate lower risk contractual cash flow matching investments.”
Latest News
NEW BUILD IN FOCUS - NEW EPISODE OF THE MORTGAGE INSIDER PODCAST, OUT NOW
Figures from the National House-Building Council saw Q1 2025 register a 36% increase in new homes built across the UK compared with the same period last year, representing a striking development for the first-time buyer market. But with the higher cost of building, ongoing planning challenges and new and changing regulations, how sustainable is this growth? And what does it mean for brokers?
The role of the bridging market and technology usage in the industry
Content editor, Dan McGrath, sat down with chief operating officer at Black & White Bridging, Damien Druce, and head of development finance at Empire Global Finance, Pete Williams, to explore the role of the bridging sector, the role of AI across the industry and how the property market has fared in the Labour Government’s first year in office.
Does the North-South divide still exist in the UK housing market?
What do the most expensive parts of the country reveal about shifting demand? And why is the Manchester housing market now outperforming many southern counterparts?
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
The new episode of The Mortgage Insider podcast, out now
Regional housing markets now matter more than ever. While London and the Southeast still tend to dominate the headlines from a house price and affordability perspective, much of the growth in rental yields and buyer demand is coming from other parts of the UK.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
© 2019 Perspective Publishing Privacy & Cookies
Recent Stories