Deficits on defined benefit schemes of the UKs biggest companies were flat over the month of September, despite reaching a mid-month low of £78bn and a funding level of 89%, according to Mercers pension risk survey
The total deficit of FTSE350 company schemes stood at £98bn, when measured using the IAS19 accounting rules. Asset values were up 0.7% from £548bn at the end of August to £552bn at the end of September. Liability values also went up over the month by £4bn to £650bn.
Ali Tayyebi, Mercer's head of DB Risk in the UK, said: 'On the surface, it appears that September was a picture of calm.
'More schemes now monitor their funding positions on a regular basis. The significant improvement in funding levels may well have triggered some changes to asset allocation to lock in some of the positive performance.'
In practice, however, many schemes were still not able to act quickly enough, he said.
Adrian Hartshorn, senior partner in Mercer's financial strategy group, added that the primary focus for scheme sponsors and trustees was the ability to finance and pay future benefits.
'The ability of trustees to do this depends both on the contribution income from the scheme sponsor and the investment income from the scheme assets,' said Hartshorn.
'Despite significant contributions and financial support from many scheme sponsors, funding levels remain stubbornly low driven primarily by low gilt yields.
'However by actively considering a wider range of asset classes, relying less on low yielding gilts and taking advantage of temporary changes in market conditions, as were observed this month, trustees and scheme sponsors are able to materially improve funding levels.'
