The accounting deficit for the defined benefit (DB) pension schemes of the FTSE350 companies reached £62bn by 31 December 2012, a £1bn increase from the £61bn deficit at the end of December 2011, according to Mercer’s Pensions Risk Survey.

The funding ratio remained at the same level as December 2011, at 89%, despite the marginal deficit increase.

The survey, which estimates the aggregate combined funded ratio of FTSE350 businesses, also revealed that 31 December 2012 saw both assets and liabilities reach their highest levels of the year.

Liability values over 2012 grew from £548bn to £588bn and asset values increased from £487bn to £526bn. While corporate bond yields fell substantially in 2012, it was not matched by a fall in market implied inflation resulting in liability value increases, the human resource consultancy firm explained.

It added that the increase in asset values for 2012 may partly be down to a contribution of £20bn paid by UK companies.

Mercer’s head of DB risk in the UK Ali Tayyebi said: “On the surface, it appears to have been a fairly flat year with deficits remaining broadly unchanged compared to 31 December 2011. However that masks the volatility experienced during the year and the fact that the year has ended with both assets and liabilities at their high point. This suggests that, as much as ever, there may be opportunities as well as risks which should be prepared for.”

Share Story: