Corporate pension deficits rose by a third to reach £550bn in 2012, with many companies having recorded their worst ever balance sheets according to Xafinity.

Using FRS17 and IAS19 accounting rules Xafinity recorded that pension deficits had reached almost £600bn in July.

Xafinity Corporate Solutions director Hugh Creasy commented: “2013 looks like it would be an equally difficult and uncertain time and corporates will need to think carefully about the choice of assumptions and what is right for them. While discount rates for the more mature schemes may be falling to around the 4.5 per cent mark, the discount rate of around 5 per cent can be justified for many. An increase of just 0.5 per cent may not sound much, but this would slash the liability measure by 15 per cent – enough to remove the deficit on the balance sheet and wipe out pension charges in the profit and loss account.”

Creasy added that recent mortality data showed that mortality rates had risen by 1 per cent in 2012 compared to the previous year and that could “temper the allowance built into actuaries’ projections over the decades to come”, something which he argued will be warmly welcomed by finance directors.

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