FTSE 100 pension schemes slip back into deficit

Written by Oliver Wade
03/09/2018

FTSE 100 pension schemes have slipped back into deficit, after breaking into surplus last month for the first time in ten years, according to JLT Employee Benefits (JLT) monthly index.

JLT chief actuary Charles Cowling commented that “markets seem to be holding their breath”.

“The Bank of England did increase interest rates last month in a long anticipated and much signposted move. However, outgoing member of the Bank of England’s Monetary Policy Committee (MPC), Ian McCafferty, has warned that we should be expecting low interest rates for the next 20 years – and this is coming from possibly the most hawkish member of the MPC, who has long encouraged a rise in interest rates. As a result, a subdued market has seen long term interest rates drift slightly downwards this month with inflation rates remaining broadly unchanged,” Cowling added.

However, when comparing the figures from August 2018 to August 2017, the improvement is vast. The reported figure as at 31 August 2017 for FTSE 100 pension schemes was a deficit of £39bn, compared to a deficit of just £3bn this year.

As of 31 August 2018, FTSE 100 pension schemes had liabilities of £678bn and assets of £675bn, whereas it had liabilities of £726bn and assets of £687bn in the same month last year.

This trend of improvement was also seen among FTSE 350 companies and all UK private sector schemes, as the deficits went from £49bn and £141bn last year to £7bn and £40bn respectively this year.

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