The total DB pension fund deficit for the FTSE 100 is back down below £50bn, says JLT Employee Benefits.

The company’s monthly fund index for DB schemes has reported that the combined FTSE 100 deficit is £45bn. Last month it was £55bn, while this time last year it was £104bn. The figure was last below £50bn at the beginning of July.

The total deficit for FTSE 350 companies is £57bn and the entire deficit for all the UK’s DB private sector schemes is £174bn.

JLT Employee Benefits director Charles Cowling said that the funding position of DB pension schemes was showing signs of positive improvement, after a traumatic few years despite an uncertain political backdrop.

“This good news comes on the back of equity markets holding up well, inflation numbers that are as bad as some expected, longevity improvements slowing down and best of all (for pension schemes at least) a sign that at last interest rates may be on the rise again, after nearly ten years of painful reductions,” said Cowling.

“Still, some challenges remain. Pension schemes which are carrying out actuarial valuations in 2017 are likely to show bigger deficits than in 2014 and trustees will therefore be knocking on the finance director’s door asking ‘more please’.”

However, Cowling said that there was more positive news in the pipeline with, the IASB meeting last week and deciding to perform further work to assess whether it can establish a more principles-based approach in IFRIC 14 for an entity to assess the availability of a refund of a surplus.

“This means that the feared changes which could have seen tens of billions of pounds added to the pension liabilities showing in the balance sheets of UK companies has been postponed – for now.

“Trustees and finance directors may wish to take advantage of these slightly calmer waters to explore opportunities to offload and settle pension liabilities,” he added.

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