FTSE 350 defined benefit pension deficit falls to £73bn

Alan Baker

The accounting deficit for FTSE 350 defined benefit (DB) pension schemes has decreased by £3 billion, from £76 billion at the end of December 2017 to £73 billion at the end of January 2018, according to research by Mercer.

Its research, which analyses pension deficits calculated using the approach organisations have to adopt for their corporate accounts, also found that the accounting deficit for DB pension schemes fell by 9% between January and December 2017, from £84 billion to £76 billion.

Liability values decreased by £13 billion at the end of January 2018, falling to £844 billion compared to £857 billion at the end of December 2017. Asset values also fell by £10 billion to £771 billion at the end of January 2018.

Alan Baker (pictured), partner and chair of the DB policy group at Mercer, said: “This is a really meaningful reduction in the pensions gap in just one month and should be considered as positive news for UK businesses, coming on top of an £8 billion decline last year.

“However, the fall in asset values was also significant and is an important reminder for individual schemes to consider the level of risk they are running. Trustees and sponsors need to understand their ability to cope with future market volatility, including shocks, and ensure they have clear plans and mitigations in place to protect them from any downside.”