Most pension schemes in the red
Nearly a third of UK pension schemes remain in the black despite recent stock market falls, research shows.
Around 30% of the UK’s 200 largest defined benefit pension schemes have surplus assets, including 40% of firms in the Ftse 100, according to consultancy firm Aon Consulting.
But overall the group said the pension schemes collectively faced a deficit of £13 billion at the end of July, after spending most of the past two months in surplus.
Once firms that have more assets than liabilities are stripped out, the total deficit among firms that are in the red rises to £24 billion. Firms that are in the black collectively have a surplus of £9 billion.
The group blamed the volatile stock market for the worsening funding position, claiming that £9 billion of the deficit was caused by the steep fall in share prices on July 26 alone - the second largest increase in one day since records began in June 2001.
Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “It is increasingly apparent that UK plc is divided between those with pension schemes in surplus and those with schemes in deficit.
“Many companies and trustees are seeking to protect their surpluses with innovative solutions such as liability driven investment, whereas others are seeking to eliminate deficits by a combination of investment strategy and company contributions.
“High levels of volatility, such as that demonstrated by market falls on July 26, is likely to increase the trend of many companies and pension schemes locking into surpluses when they appear.”