The aggregate deficit in UK company pension schemes increased by £100bn in August compared to the month before, an examination by Xafinity pension consultants has found.
According to the firm's modelling of pension funds, the total deficit last month grew to £729bn, when measured using the FRS17 and IAS19 accounting rules. This is up 27% compared to the same period last year, as a result of a worsening inflation outlook, which could erode the value of funds.
Overall, the tracker estimated that scheme liabilities stand £1.8bn for August, an 8% increase year-on-year, while scheme assets fell by almost 1% to £1.1bn over the same period.
Hugh Creasy, a director at Xafinity, said the aggregate deficit now corresponds to six months of the UK's gross domestic product, and was now at a level that 'simply cannot be ignored'.
'Pension schemes have access to a range of options for managing price inflation risk, he said. 'Those who have successfully hedged will be far more comfortable than those who have not.
'Today's news will make unwelcome reading for those yet to address the core financial risks in their pension schemes.'