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.
Sign up for Risk.net email alerts
UK, 12th - 30th Jun 2014
UK, 25th - 26th Feb 2014
USA, 27th - 28th Feb 2014
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.
Updating your subscription status
Risk iPad and iPhone Apps