UK private sector defined benefit pension scheme deficits were “largely unchanged” in the 12 months to March 2018, JLT Employee Benefits has found.

According to JLT’s monthly index, as at 31 March 2018 the total deficit of all UK private sector pension schemes was £131bn, down £3bn from £134bn at the same time last year. Both assets and liabilities decreased from £1,541bn and £1,675bn at the end of March 2017 to £1,520bn and £1,651bn at the end of March 2018, respectively.

Under the standard accounting measure, IAS19, the deficit of FTSE 100 companies also underwent a slight reduction year-on-year from £35bn in March 2017 to £33bn in March 2018. The deficit of FTSE 350 firms also fell in the year from £44bn to £43bn at the end of last month.

Both FTSE 100 and FTSE 350 firms retained a funding level of 95 per cent.

JLT Employee Benefits director Charles Cowling commented: “Despite some significant increases in volatility, markets continue to be reasonably benign for pension schemes and overall reported pension deficits are largely unchanged from twelve months ago. However, this positive picture still masks ongoing challenges for a number of companies with large pension schemes, for whom Carillion remains a stark reminder of what can go wrong.

“One of the key problems for many companies is that the pension deficit calculated by scheme trustees, which determines the cash funding required to be paid by the employer, is significantly greater than the pension deficit reported in the employer’s accounts.”

Nonetheless, Cowling noted that he is pleased by the DB white paper’s provision of greater powers to The Pension Regulator to increase the protection of members’ benefits. “This confirms our belief that The Pensions Regulator will take a tougher stance in its 2018 Annual Funding Statement on companies, prioritising dividends to shareholders over contributions to pension schemes,” he concluded.

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