FTSE 100 pension scheme deficit rises to £21bn

The combined deficit of FTSE 100 DB pension schemes increased by £1bn to £21bn during January 2019, JLT Employee Benefits' latest monthly funding update has revealed.

However, the FTSE 100 DB scheme deficit fell by £14bn in comparison to this time last year.

Commenting on the update, JLT chief actuary, Charles Cowling said: “Despite the political turmoil in Westminster and across the EU, the start of 2019 has seen little change to the aggregate position for FTSE 100 pension schemes which continue to show a modest overall deficit.

“Markets seem to be holding their breath as the political dance around Brexit becomes ever more tortuous.”

JLT’s latest figures in its monthly index on revealed that FTSE 100 companies have assets of £656bn and £677bn in liabilities at 31 December 2018. This gives the schemes a funding level of 97 per cent.

Compared to this time last month, assets and liabilities have increased by £10bn from £646bn and by £11bn from £666bn respectively, while the funding level remained unchanged.

In comparison to this time last year, assets fell by £22bn from £678bn and liabilities decreased by £36bn from £713bn.

Cowling added: “Inevitably the outlook for pension scheme deficits depends very much on the outcome of the Brexit negotiations. But the risk of more volatility and higher pension deficits must be high.

“A number of pension schemes have successfully navigated the turbulent markets by taking out investment risk at every opportunity. Others are still trying to de-risk their pension schemes and hoping for favourable market opportunities to emerge.

“This, though, may be a vain hope, and companies and pension trustees have to decide whether they can continue to afford to run with high risk positions. In particular the fall-out from a difficult Christmas in the retail sector seems likely to claim some more victims yet.”

The FTSE 350 pension scheme deficit also fell from January 2018, from £44bn to £29bn, while assets over the same period decreased from £765bn to £742bn, liabilities fell from £809bn to £771bn and the funding level increased from 95 per cent to 96 per cent.

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