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Pensions deficit eases

 

Vicky Shaw
Tuesday 14 February 2012 12:11 EST
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The total deficit of private sector final-salary pension schemes has eased back from its previous record high, Pension Protection Fund (PPF) figures showed today.

The deficit of 6,432 schemes is estimated to have dropped to £265.5 billion at the end of January, from a record deficit of £270.8 billion at the end of December.

But the position has worsened on the previous year, when a surplus of £38.5 billion was recorded at the end of January 2011.

The December figure was the largest deficit since the records began in March 2003, but the PPF has cautioned that direct comparisons are affected by changes made to its calculations from April 2011, which had the effect of raising liabilities.

The National Association of Pension Funds (NAPF) has said low interest rates and Bank of England quantitative easing were behind previous increases to the figures, but argued that pension funds could manage "market volatility" over the longer term.

The funding ratio, which records assets as a percentage of liabilities, of schemes rose on a monthly basis from 78.9% to 79.5% at the end of January 2012.

But the funding ratio is lower than the 104.2% recorded in January 2011.

There were 5,388 schemes in deficit and 1,044 schemes in surplus.

PA

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