Pension funds were brought to their knees on Monday 2 March with the biggest single day loss on record of £27bn, according to Aon Consulting.

The employee risk and benefits management firm also said that the last five days have been the most volatile on record for defined benefit (DB) pension schemes. The FTSE experienced its lowest level in six years this week, and AA corporate bond yields were particularly erratic, leading Aon to calculate the knock on effect for these final salary schemes.

Head of corporate solutions at Aon Consulting, Marcus Hurd, said: "The past week has been the most volatile for final salary pension schemes since accounting standards were changed in June 2001. Monday posted the biggest single day loss on record, a huge £27bn, which dwarfed the previous biggest loss of £16bn on 15 October 2008."

The deficit in this time peaked at £73bn, which is the highest level since February 2006. "This was prompted by the large losses in the equity markets and the 0.25 per cent drop in corporate bond yields.

"We are seeing swings of unprecedented proportions at the current time. With one half of companies about to formally report their position at 31 March, this is a real concern. Depending on where markets settle at midnight on Tuesday 31 March, this will determine how companies report their balance sheets and 2009 profitability."

Hurd said the situation is presenting company directors with "a roulette wheel of pension scheme deficits and hoping that markets are at a high when the ball stops rolling. The levels of changes we are seeing are frightening even the hardiest Finance Director. A cool head and knowledge of all the options available are essential in these difficult times."

- Pensions Age March 2009

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