The FINANCIAL -- Mercer’s Pensions Risk Survey data shows that the accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies increased by £5bn to £34bn in the three months from end of June to end of September. The rise was driven by an increase in liability values of £3bn to £821bn, and a fall in asset values of £2bn to £787bn.
For the month of September, the quoted funding level remained unchanged despite notable movements in asset and liability values. Liabilities decreased by £8bn due to an increase in corporate bond yields, partially offset by an increase in market implied inflation. However, asset values also fell by the same amount from their position at the end of August.
Alan Baker, Head of DB Solutions Development and Partner at Mercer, said: “Despite stability in the overall funding gap in September, we saw significant swings in asset and liability values. Market volatility is putting recent improvements in the funding deficit at risk and trustees and sponsors should act now to assess the risk they are running and ensure they have plans in place to protect them from any future downside.”