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
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • August 2018
08

FTSE 350 DB pension deficit halves in 2018

Open-access content 3rd August 2018

The UK’s 350 largest listed companies have seen their pension schemes’ accounting deficits fall by more than half so far this year, analysis from consultancy firm Mercer shows.

2


The combined deficit for defined benefit (DB) schemes fell from £72bn at the start of the year to £32bn on 31 July, although this was up on the £29bn shortfall recorded at the end of June.

An increase in market implied inflation caused liabilities to rise from £818bn to £826bn by the end of last month, but that this was offset by asset values climbing from £789bn to £794bn.

The funding level remained at 96%, however, Mercer senior partner Ali Tayyebi said schemes using gilt yields to measure funding positions might not have seen as big an improvement.

"Trustees typically use gilt yields for measuring the funding position and setting contribution rates," he said. "Gilt yields have not risen as much as corporate bond yields since the start of the year.

"Nevertheless, trustees and employers need to continue to ask themselves how much risk they need to take to meet their objectives."

Mercer's analysis relates to around half of all pension scheme liabilities, and analyses deficits using the same approach companies adopt for their corporate accounts.

The consultancy expects 2018 to be a record year for pension risk transfer due to improved funding levels, attractive pricing, and uncertainty over Brexit driving risk reduction.

This comes after Bank of England governor Mark Carney told the BBC today that the chances of the UK crashing out the EU without are deal "uncomfortably high" and "highly undesirable".

Mercer strategic advisor, Le Roy van Zyl, said: "Uncertainty over the outcome of the Brexit negotiations means there is a clear need for trustees and sponsors to be prepared for fluctuating circumstances. 

"This preparation should focus on scheme finances and risk, but also the challenges of making effective decisions against this uncertain backdrop."

Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our August 2018 issue of The Actuary.
Click here to view this issue
Filed in:
08
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

GI Model development contractor

£700 - £1000 per day
Reference
119012

Pricing Actuary - Marine, Credit, Aviation

London (Central)
Total package circa £230K
Reference
119011

Capital Modelling Actuary

London, England
£70000 - £100000 per annum
Reference
119010
See all jobs »
 
 
 
 

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
​
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

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200