The UK’s largest defined benefit (DB) pensions schemes were facing a reduced surplus at the end of April and uncertainty over how the Pensions Regulator will exercise its increased powers to make sponsoring companies contribute where a corporate transaction could threaten members’ pensions.
The Aon200 Index, which tracks the the UK’s largest privately-sponsored pension schemes, reported an aggregate pension scheme surplus of £6 billion at the end of April, down from £11bn at the end of March. Minimal overall stockmarket volatility for the month, accounted for 56% of the schemes remaining in surplus, said Aon Consulting.
The total surplus for schemes in the FTSE 100 was £5bn at the end of April, down from £10bn at the end of March, according to Aon Consulting.
Commenting on the latest figures and regulatory changes, Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “The regulation of corporate transactions is a necessary evil to avoid pension schemes suffering at the hands of unscrupulous rogue traders. The majority of companies, however, wish to honour their obligations to pension scheme members and should not be punished by cumbersome regulations preventing genuine corporate activity and innovation.
“The Pension Regulator is right to clamp down on socially irresponsible initiatives. At the same time, however, TPR should resist the temptation to penalise all corporate activity, especially in the current economic climate.”