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
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • Sections
  • News

FTSE 350 pensions return to deficit

Open-access content Tuesday 5th May 2020 — updated 12.18pm, Wednesday 6th May 2020
Authors
CHRIS SEEKINGS

The accounting position of defined benefit (DB) pension schemes at the UK's 350 largest listed companies returned to a deficit at the end of last month as COVID-19 continued to hit the economy.

Web_PensionRisk_iStock-458570557 (1).jpg

That is according to research from Mercer, which shows that the FTSE 350's DB pension position moved from a surplus of £10bn at the end of March 2020, to a deficit of £52bn on 30 April.

The consultancy firm's findings show that liabilities rose by £102bn to £897bn at the end of April, compared with £795bn at the end of March, while asset values increased by £40bn to £845bn.

Mercer chief actuary Charles Cowling said: “Pension deficits, as measured by accounting rules for company accounts, have not changed much compared to 12 months ago. 

“However, pension liabilities as measured by trustees, have jumped as equity markets and interest rates have witnessed record falls. 

“It will be a challenging year for actuarial valuations, with any demands from trustees for extra cash likely to be unwelcome as many employers struggle to find the cash to keep their businesses going.”

Mercer’s data relates to about 50% of all UK pension scheme liabilities, and reflects pension deficits calculated using the approach companies have to adopt for their corporate accounts.

The latest figures show continued volatility to accounting positions, reversing what was recorded at the start of the UK's COVID-19 outbreak when assets and liabilities both fell substantially.

Cowling said that The Pensions Regulator (TPR) has a “difficult path to steer” as it encourages trustees to focus on funding improvements while employers suffer with the impact of coronavirus.

“A previous chancellor of the exchequer asked TPR and trustees to consider the growth prospects of companies when reaching agreement on pension contributions,” he continued.

“Now perhaps survival prospects should be the focus ,and so trustees need, more than ever, to understand what level of cash contributions employers can truly afford. 

“Echoing words from TPR’s latest statement, in the current environment, we expect the frequency and intensity of trustee monitoring of employers to be increased significantly until covenant visibility and strength is restored.”

Image credit | iStock
Filed in
News

You might also like...

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

Latest Jobs

Risk Actuary - General Insurance

London (Greater)
£60,000 - £85,000
Reference
145934

Project Actuary - Life Insurance

Midlands
£60,000 - £110,000
Reference
145933

Model Validation Actuary

London (Greater)
£60k - £80k
Reference
145932
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

© 2023 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