UK pension deficits cut by 61%
28 Apr 2006, Gareth Gore, Risk magazine
According to analysts, return on UK equities rose by 2% and long-dated bond yields by 0.2% in April, contributing £6 billion and £14 billion respectively to pension funds.
“The combination of rising stock markets and bond yields has been good news for pension schemes,” said Andrew Claringbold, principal at Aon Consulting. “Now 25% of pension schemes are fully funded on an FRS17 basis compared to fewer than 5% as at the start of the year.”
Under FRS17 rules in the UK, pension funds are required to calculate their liabilities using a discount rate based on AA-rated corporate bonds and to disclose them on the balance sheet.