FTSE 350 DB deficit increased by £5bn in Q3 – Mercer

The accounting deficit of defined benefit pension schemes for the UK’s 350 largest listed companies increased by £5bn to £34bn between the end of June and the end of September, according to Mercer’s latest data.

Mercer’s Pensions Risk Survey found that the rise was driven by a £2bn fall in asset values, to £787bn, and a £3bn increase in liabilities, to £821bn, over the same period.

Mercer DB strategist and partner, LeRoy van Zyl said: “We continue to see significant levels of activity, with trustees and sponsors taking action to reduce risk and lock in financial gains.

“With uncertainty set to continue in the run-up to the UK’s departure from the EU early next year, trustees, in particular, should consider the potential impact on their sponsor’s financial security and how that could impact on their overall risk management plans.”

Despite movements in asset and liability values, the funding level remained the same throughout September.

During September, liabilities decreased by £8bn due to an increase in corporate bond yields, partially offset by an increase in market implied inflation. However, asset values also fell by the same amount from their position at the end of August.

Mercer head of DB solutions development and partner, Alan Baker added: “Despite stability in the overall funding gap in September, we saw significant swings in asset and liability values.

“Market volatility is putting recent improvements in the funding deficit at risk and trustees and sponsors should act now to assess the risk they are running and ensure they have plans in place to protect them from any future downside.”

    Share Story:
Spotlight on pensions tracing: making huge strides in a changing world
Alex Mitchell, Head of Tracing & Data Solutions at Capita, meets Francesca Fabrizi, Editor in Chief of Pensions Age to discuss recent trends in the pensions tracing space

MAC strategies in focus
Francesca Fabrizi meets Craig Scordellis, Head of Long-Only Multi-Asset Credit at CQS, to discuss what MAC strategies can offer pension schemes today