The pension deficits of the UK’s 200 largest defined benefit schemes have declined by 61% in the first four months of the year because of increasing returns from the equity and bond markets, according to research from Aon Consulting. Deficits now stand at £28 billion compared with £72 billion at the end of 2005.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.
More on Insurance
Group led by Andrew Haldane opens debate on effects of insurance regulation
Regulators cannot always be as tough or as lenient as they would like
Change to definition of unit-linked expenses would increase firms' SCR
Insurers are maintaining their interest in emerging market debt
Sign up for Risk.net email alerts
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
Isda directors warn on fragmentation, access and liquidity - but expect problems to pass
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.