The accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies finished 2021 at £76bn, according to the latest Pensions Risk Survey by Mercer.

This compares to £70bn at the end of 2020 but reflects a large jump from £41bn reported at the end of 2018.

According to Mercer, liability values showed little change in December, falling from £914bn to £913bn, whereas asset values fell back slightly – down from £844bn to £827bn.

Mercer’s monthly Pensions Risk Survey data relates to around 50% of all UK pension scheme liabilities, with analysis focused on pension deficits calculated using the approach that companies adopt for their corporate accounts. The data underlying the survey is refreshed as companies report their year-end accounts.

Commenting on the latest figures, Mercer UK wealth trustee leader, Tess Page, said: “Anyone comparing December 2020 with December 2021 would conclude that UK pension deficits were stable and plain sailing.

“However, this belies the rocky ride across the period – 2021 was another strange year, and we saw bond yields and investment markets jumping around a lot, and considerable debate around future inflation.”

Page added: “Overall, whilst some pension schemes have kept their heads comfortably above water in 2021, others are barely staying afloat. Schemes that have not yet managed their significant risks – notably inflation, interest rates, and growth asset risk – will see volatile funding level movements from month-to-month.

“This year [2022] therefore brings opportunities to map out a clear plan for risk management – with the new Funding Code and Single Code of Practice on the horizon there has never been a better time to do so.”

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