Corner turned on pension scheme deficits

Company pension deficits have fallen significantly in 2017 amid strong stock markets, the first UK interest rate rise in ten years and a slowdown in the rate of increasing longevity, a new report says today.

The total deficit among all UK private sector pension schemes fell to £150 billion at December 2017, down from £187bn a year earlier.

Among blue-chip FTSE 100 businesses the shortfall last month was £41bn compared with £55bn a year earlier, according to JLT Employee Benefits.

And, among the UK’S biggest 350 companies, the pensions deficit is now £52bn, down from £68bn in December 2016.

Charles Cowling, director, JLT Employee Benefits, said: “2017 was a turbulent year for pension schemes but one with many positives.

“Markets were strong in the face of considerable political uncertainty and we have, finally, signs that interest rates are on the way up.

“Additionally, the latest mortality analysis points to a slowing down in the rate of increasing longevity. All of this is good news for pension scheme deficits which have shown some significant improvement over the past year.”

However, Cowling said that at the same time the industry was seeing more generous defined benefit (or final salary) pension schemes “clearly disappearing from the private sector in the UK”.

He added: “Tesco, Royal Mail and the Universities Superannuation Scheme have just closed, or are closing their doors, to existing members as well as new members.” 0 Charles Cowling said 2017 was ‘a turbulent year’