UK pension deficits soar in downturn

The UK’s defined benefit (DB) pension schemes are estimated to have a combined deficit of almost £100bn, with £17bn wiped off the value of plans last month alone due to the plummeting stock market, a new report shows.

According to the Pensions Protection Fund (PPF), who calculated the aggregate funding position of almost 7,800 private-sector final salary funds, the schemes had worsened to a deficit of £97.3bn at the end of October.

The deficit at the end of September stood at £80.3bn. Just one year ago, in October 2007, the schemes were showing a surplus of £84.1bn.

The PPF, which insures the retirement benefits of insolvent employers, reported that a total of 6,468 final salary schemes were in deficit in October 2008, a figure that represents 84% of the total defined benefit schemes in their sample.

It also reported that these schemes in surplus saw their total deficit rise to £122.1bn in October from £113.5bn in September, a huge increase from £36.9bn a year ago and primarily attributable to the falling value of equities in the stock market.