Aggregate deficits of FTSE 100 companies contracted to £27bn following yesterday’s market movements, down from £35bn on 31 December 2012 according to Towers Watson.

However yesterday’s gains after the US fiscal cliff deal arrived fractionally too late for companies preparing to update investors on the health of their DB schemes. The most common accounting period for large UK companies is the year to 31 December.

Towers Watson head of UK pensions John Ball said: “Total pension scheme assets did not actually increase much yesterday – losses on their increasingly large bond holdings will have almost offset the gains on equities. However deficits still fell sharply because the liabilities in company accounts look smaller when corporate bonds lose value.

“Companies may have been able to give investors a more rosy picture if the US ‘fiscal cliff' negotiations had not gone right down to the wire. Nonetheless, with deficits having been £48bn going into the second half of November, the 31 December position may typically be a little better than some had prepared for.”

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