UK. FTSE 350 DB pension deficit falls by £28bn; ‘looming risks’ ahead
The aggregate accounting deficit of FTSE 350 companies’ defined benefit (DB) pension schemes fell by £28bn during December, ending the year at £76bn, according to Mercer’s latest Pensions Risk Survey.
It revealed that liability values fell from from £962bn to £913bn during the month, although asset values also declined, from £858bn to £837bn.
However, whilst the deficit had fallen compared to November, it had increased year-on-year, with an aggregate deficit of £70bn recorded at the end of 2020 and of £41bn as at 31 December 2018.
Liability values saw little change during 2021, falling from £914bn to £913bn, while asset values declined from £844bn to £837bn.
The average funding level remained static year-on-year at 92 per cent.
Mercer UK wealth trustee leader, Tess Page, warned that whilst anyone comparing December 2020 with December 2021 could conclude that UK pension deficits were stable and plain sailing, this “belies the rocky ride across the period”.
“That said, given the ongoing pandemic and considerable economic uncertainty, schemes have arguably made it through so far with relatively little damage,” she added, suggesting, however, that there are some “looming risks” ahead in 2022.
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