DB pension deficits up £40bn

UK coins currency pounds growth 480The combined deficit of defined benefit pension funds in the UK now stands at £460bn, according to the latest figures from consultancy PwC.

Between July and August, deficits increased by £40bn, according to the firm’s Skyval Index, which tracks around 5,800 DB pension funds.

Together, the funds manage around £1,570bn in assets, with liability targets at £2,030bn.

PwC chief actuary Steven Dicker says: “August saw a small decrease in long-term real interest rates as measured by Government bond yields, which has led to a £60bn increase in liabilities. In contrast, assets have only grown very modestly by £20bn. Consequently, deficit has increased by £40bn.

“The deficit calculation is based on a ‘gilts+’ approach and is sensitive to even modest market movements. Compounding with the uncertain economic and political climate, the deficits calculated on this basis are likely to remain volatile.”

The deficit is lower than at the end of 2016, when it stood at £560bn. £40bn was erased from the deficit between June and July, its third consecutive monthly decrease.

DB funds end 2016 with £560bn deficit

Changes accounting for reduced life expectancy projections also led to a drop in the deficit measure of £10bn around May.

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