UK pensions return to black

Pension funds across the UK’s top 100 companies have returned to positive figures, after years of deficit according to leading pensions analysts today.

Figures released today have shown that private pension funds were found to have reached a surplus, after several years of abuse and poor financial management had lead to the so called ‘black hole’ in the market.

The findings reflect the first time in over five years that UK pension funds have seen positive figures, after years of crisis and lax regulation.

The study, conducted by actuaries Lane Clark & Peacock has suggested that private funds across 100 top UK companies have moved into surplus for the first time in almost half a decade, up from a deficit of £36 billion to a surplus of £12 billion over the course of this year.

The increase is attributed largely to improved stock market trading worldwide, and an increase in private employer’s contributions into pension funds, which has seen the dramatic turnaround in just 12 months.

However, it is thought that with increasing labour life expectancy and an aging workforce, the surplus is nowhere near enough to be considered ’safe’, and with the growing risk of investments of fund equity, analysts would prefer a greater safety margin to guarantee private pension payments on retirement.

As more and more workers retire and stop contributing to the pension fund, so too any surplus will begin to deplete. And with people living through longer retirements, the availability of pension payments cannot be guaranteed to be sustainable at this marginal surplus, hence experts are calling for greater investment by employers to continue this positive growth.

Additionally, the scale of investment in shares puts a great deal of pressure on positive trading performance, and with global economic pressures beginning to take their toll, private funds could also be badly hit.

Discuss this in the Finance Markets forums

Story link: UK pensions return to black