UK private sector pension scheme deficits soared by £215bn in the year to 31 October 2016, JLT Employee Benefits has reported.

In its monthly index, JLT found that UK private sector DB deficits rose by £215bn to £447bn this year, from £232bn at the end of October 2015.

In the same period liabilities rose from £1,459bn in 2015 to £1,876bn in 2016 and assets also grew from £1,227bn to £1,429bn. The funding level also fell from 84 per cent to 76 per cent.

The deficits of FTSE 100 companies grew from £69bn to £173bn in the period and FTSE 350 companies’ deficits also increased from £80bn to £197bn.

Both groups of companies’ funding levels dropped to 77 per cent at 31 October 2016.

JLT Employee Benefits director Charles Cowling, commented: “This last month has seen an easing in deficits from the record heights of over £500 billion recorded at the end of August. But deficits have still doubled over the last 12 months and there appears no relief in sight for companies with large pension schemes. Some have argued that in light of unprecedented market conditions, there should be a review of how pension deficits are calculated.”

“Schemes can make life easier by following a three point plan,” Cowling said.

This involves taking every opportunity in volatile markets to reduce risk at an acceptable price, looking at all options to reshape liabilities and settle liabilities through member exercises and implementing an integrated risk management framework that takes advantage of alternative ways of providing security to pension scheme members.

“Companies and trustees should leave no stone unturned in their search for less costly ways of ensuring that members get their promised benefits without massively disadvantaging shareholders,” he added.

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