Defined benefit (DB) pension deficits of the top 100 UK companies are set to increase by more than £25 billion within one month.
According to PensionsFirst’s PF Risk Report, over a year this could result in an increase of around £100 billion in the total deficit, bringing the current deficit of £43.5 billion to more than £140 billion.
Potential causes of the increase in deficits could include decreases in equities and a 1% increase in long-term inflation.
According to the report, another concern for the UK’s largest companies is that their exposure to market volatility remains unhedged.
Benjamin Reid, chief executive officer of PensionsFirst Analytics, said: “This is a serious issue for all stakeholders – including pension scheme members and shareholders – because unhedged pension liabilities can result in significant exposure to market-directional risk.”
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