+44(0)20 3730 8304 info@firstassetclass.com

Survey data shows accounting deficit of defined benefit pension schemes

Significant improvement in funding levels may well have triggered some changes to asset allocation to lock in some of the positive performance.

Mercer’s Pensions Risk Survey data shows that the accounting deficit of defined benefit pension schemes for UK companies remained unchanged over the month of September.

According to Mercer’s latest data, the estimated aggregate IAS19 deficit for the defined benefit schemes of FTSE350 companies stood at £98bn (equivalent to a funding ratio of 85%) at 30 September 2013.

Asset values increased by £4bn over the month from £548bn at 31 August 2013 to £552bn at 30 September 2013.

Liability values also increased by £4bn over the month from £646bn at 31 August 2013 to £650bn at 30 September 2013.

“On the surface, it appears that September was a picture of calm with the FTSE100, long-term corporate bond yields and the market’s view of long-term inflation expectations all broadly unchanged from 31 August to 30 September.

“However this hides the fact that a combination of rises in the stock market and rises in long-term bond yields had reduced the deficit to around £78bn on 11 September.” said Ali Tayyebi, head of DB Risk in the UK.

“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 are still not able to act quickly enough.”

Source- dofonline

, , , , , , , , , , , , ,