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FTSE 350 Pension Deficit Holds Steady in January
Pensions Risk Survey
4 Feb 2019 United Kingdom Accounting, Funding and Minimum Funding Requirement, Surpluses and Deficits
Key Details
  • FTSE350 pension deficit remains at £41bn
  • £18bn increase in liabilities and asset values
  • Continued market and political uncertainty underpins importance of de-risking
  • Mercer has today published its monthly Pensions Risk Survey data, which shows that the accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies remained unchanged at £41bn in January. This follows a significant rise in the deficit in December 2018, which saw the gap widen by £34bn.
  • Pension scheme liabilities increased by £18bn to £806bn in January due to a fall in corporate bond yields, offset by a fall in market implied inflation. However, asset values also rose by £18bn to £765bn leaving the overall deficit unchanged.
  • Mercer's data relates to about 50% of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their corporate accounts. The data underlying the survey is refreshed as companies report their year-end accounts. Other measures are also relevant for trustees and employers considering their risk exposure. But data published by the Pensions Regulator and elsewhere tells a similar story.
  • Mercer estimates the aggregate combined funded ratio of plans operated by FTSE350 companies on a monthly basis. This is based on projections of their reported financial statements adjusted from each company’s financial year end in line with financial indices. This includes UK domestic funded and unfunded plans and all non-domestic plans. The estimated aggregate value of pension plan assets of the FTSE350 companies at 31 December 2018 was £747bn, compared with estimated aggregate liabilities of £788bn. Allowing for changes in financial markets through to 31 January 2019, changes to the FTSE350 constituents, and newly released financial disclosures, the estimated aggregate assets were £765bn, compared with the estimated value of the aggregate liabilities of £806bn.

source: Mercer Press Release
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