FTSE 350 pension deficits increase 8%

FTSE 350 defined benefit (DB) pension scheme deficits grew by 8% to £92 billion in January, according to Mercer’s latest Pensions Risk Survey.

The £92 billion total was also higher than the £84 billion reported at 31 December 2011, according to the international accounting standards (IAS) 19 figures.

IAS 19 asset liability values have also grown, up from £562 billion at 31 December 2011 to £586 billion at 29 February 2012.

This growth comes despite asset value growth, which increased from £478 billion at 31 December 2011 to £494 billion at 29 February 2012, helped by a 7% rise in the FTSE 100 index since the start of the year.

Ali Tayyebi, senior partner and pension risk group leader at Mercer, said: “Not only are government bond yields at historically low levels, but the extra yield on corporate bonds is coming down. This could push up the liability calculations.

“However, bond yields at longer durations have not fallen. This means that some companies that have taken this fully into account could have seen a reduction in liabilities over the month.†

“We expect to see developments in the approaches companies adopt for valuing pension scheme liabilities in their accounts when the end of December accounts are published.”

Read more articles on pension scheme deficits