FTSE 350 pension deficit remains at £41bn

The accounting deficit of DB pension schemes in the FTSE 350 remained unchanged at £41bn in January, Mercer’s latest figures have revealed.

In its latest monthly Pensions Risk Survey, Mercer found that the deficit remained the same as the rise in liabilities was offset by the increase in assets.

Commenting, Mercer partner, Maria Johannessen said: “The ship has been steadied in January following significant volatility in December, which was a disappointing end to a year that saw a surplus during the summer for the first time since Mercer began regularly monitoring the position.

“As market and political uncertainty continue to cause significant volatility, it’s important trustees ensure they are adequately protected from downside risk.”

During January, DB pension liabilities increased by £18bn to £806bn due to a fall in corporate bond yield.

Asset values also rose by £18bn to £765bn, resulting in an unchanged overall deficit of £41bn.

Mercer partner, Le Roy van Zyl added: “While January saw the accounting deficit of DB pension schemes remain steady, there is still a significant gap to fill.

“Brexit uncertainty is of course still high, and this is likely to cause material funding level volatility until it is resolved, depending on pension schemes’ exposure to UK financial factors.

“There are also material emerging global events that add to this volatility. Trustees must reflect on their risk appetite against this backdrop, given the strength of support from their sponsor, and ensure the risk they’re running is consistent with their scheme objectives.”

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