FTSE 350 defined benefit pension asset values fall by £6bn

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The defined benefit (DB) pension asset values of FTSE 350 organisations fell by £6bn between 30 November 2015 and 31 December 2015 from £646bn to £640bn, according to a study from Mercer.

Its Pensions risk survey also found that liability values in the FTSE 350 were £704bn in December 2015 compared to £724bn in November 2015, representing a fall of £20bn.

The research also found:

  • The accounting deficit of DB pension schemes fell from £78bn at the end of November to £64bn in December.
  • Year on year figures show that the overall deficit fell from £74bn on 31 December 2014 to £64bn on 31 December 2015, which was primarily driven by increases in asset values from £624bn to £640bn.
  • Liabilities increased from £698bn to £704bn between December 2014 and 2015.

Le Roy van Zyl, principal in Mercer’s financial strategy group, said: “With slightly improved funding levels December had better news for pension schemes and sponsors. However, ‘one swallow does not make a summer’, and looking at the coming year, there is unfortunately considerable scope for downside, with a number of political and economic flashpoints across the globe.

“Pension schemes still have significant exposures to market conditions and both trustees and sponsors are likely to become increasingly focused on how this financial exposure and other costs can be better managed.”