The aggregate deficit of defined benefit (DB) pension schemes increased by £35 billion in one month, according to research by the Pension Protection Fund (PPF).
The PPF 7800 index estimated that the aggregate deficit of the 6,316 pension schemes in the PPF 7800, which are potentially liable for entry to the PPF, increased to £236.6 billion at the end of March 2013, from a deficit of £201.5 billion at the end of February 2013.
It also found:
- The funding ratio decreased from 84.6% to 82.6%.
- Total assets of the schemes stood at £1,121.5 billion and total liabilities at £1,358.1 billion.
- 5,080 pension schemes were deficit and 1,236 pension schemes in surplus.
Adam Boyes, senior consultant at Towers Watson (pictured), said: “For a significant minority of employers, this is the worst possible time for deficits to look so swollen.
“The question now is what to do about it. Even where employers can afford to pay a lot more than they have been doing – and many cannot – schemes may have to anticipate remaining underfunded for longer than previously planned.
“For some employers that closed their final salary schemes to new entrants a long time ago, this will be another reason to consider stopping existing members from building up further benefits as well.
“The more it is going to cost them to finance pensions promised in the past, the less money they may have available to pay for new final salary entitlements.”