The total defined benefit deficit of FTSE 350 firms increased to £57bn as of 31 January from £40bn at the end of 2019, according to Mercer.

The firm’s Pensions Risk Survey found the deficit climbed after liabilities grew by £34bn to £916bn, which Mercer said was “primarily driven by falls in corporate bond yields”.

This outpaced a £17bn increase in asset values to £859bn.

Mercer partner, Charles Cowling, said that, though funding positions had deteriorated, there were “reasons to be optimistic about the outlook for pension schemes”.

“The Bank of England just announced that it will not reduce interest rates this month due to signs that the economy is picking up. The IMF expects the UK to be the fastest-growing European economy this year and the CBI’s latest quarterly manufacturing confidence survey showed the biggest three-month jump in confidence since 1958,” explained Cowling.

“In addition, ‘Brexit day’ may also remove an important market uncertainty,” he added.

Cowling noted that there were still reasons to be cautious, citing the fact that post-Brexit trade uncertainties “could drag on for years”, as well as warnings from Bank of England Governor, Mark Carney, that “evidence of a pick-up in growth is not yet widespread”.

The Pensions Risk Survey data relates to roughly half of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies adopt for their corporate accounts.

The data underlying the survey is refreshed as companies report their year-end accounts.

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