The accounting deficit of defined benefit pension schemes for the UK’s 350 largest listed companies grew by £3bn in July, according to Mercer.

It blames the rise from £48bn at the end of June to £51bn by the end of July, to a 0.16 per cent decline in corporate bond yields, which is in part a result of heightened fears of a no-deal Brexit and the business uncertainty this brings.

The fall in bond yields helped cause liabilities to increase by £24bn to £884bn, while asset values stand at £833bn, a £21bn increase from £812bn at the end of June. The funded status was unchanged over the month at 94 per cent.

Mercer actuary Charles Cowling added: “A fall in the value of sterling has the potential to create a spike in inflation and now there is also an increasing likelihood of an interest rate cut by the Bank of England following the Federal Reserve’s recent decision.

“Trustees should therefore urgently evaluate the potential impact of political and economic uncertainty on their sponsors and pension schemes and be in a position to capitalise on de-risking opportunities as they arise.”

Mercer’s data relates to about 50 per cent of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their corporate accounts. The data underlying the survey is refreshed as companies report their year-end accounts.

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