Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • January 2016
01

Pension deficit more than trebles for UK's biggest listed firms

Open-access content Thursday 5th January 2017 — updated 5.50pm, Wednesday 29th April 2020

The combined accounting deficit of defined benefit (DB) pension schemes for FTSE350 companies more than trebled from £39bn at the end of 2015 to £137bn on 30 December 2016 according to consultancy firm Mercer.

2

Their Pensions Risk Survey shows that at the end of last year, the UK's biggest firms' asset values were £720bn, while their liabilities were valued at £857bn, compared to the previous year when assets were worth £634bn and liabilities were £673bn.

This is thought to be due to pension deficit contributions and positive asset returns being offset by a fall in corporate bond yields and rising inflation expectations caused by unexpected political events like the Brexit vote and election of Donald Trump.

Mercer senior consultant, Le Roy van Zyl, said: "Pension scheme trustees and sponsors face the new year with significant uncertainty.

"Brexit is likely to move beyond a mere intention, and the effect of new leadership in the US will become clear - not to mention other major events such as the French presidential elections."

"If we look at how volatile conditions have been, and how volatile they may well continue to be, schemes will have to be responsive on a variety of issues.

"In this environment, best outcomes will be achieved by tackling covenant, funding and risk management together. It will be especially important to focus on future cash-flow requirements in different scenarios."

This latest data relates to around 50% of all UK pension scheme liabilities and is compiled using the same approach that companies adopt for their corporate accounts, which is refreshed at the end of each year.

It shows that the DB pension deficit for FTSE350 companies increased by £10bn between November and December in 2016, despite the FTSE100 index ending the year on an all-time high.

Mercer UK DB risk leader, Alan Baker, said: "After a very challenging year, pension deficits increased again, and end the year more than three times higher than the end of 2015 at £137bn.

"This continues to put real pressure on any risk management plans and will require trustees and corporate sponsors to work closely together to establish the right framework to monitor and manage those risks."

This article appeared in our January 2016 issue of The Actuary.
Click here to view this issue
Filed in:
01

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Underwriting Risk Manager

London (Central)
£85K-£95K + Benefits
Reference
124386

Reserving Manager (Contract)

London (Central)
£1200 - £1400 per day
Reference
124385

Life Actuary - Contract - IFRS 17 Financial Impact

England, London / England, Bristol / North Yorkshire, England
£900 - £1150 per day
Reference
124384
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2022 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ