PPF: DB pension scheme deficit falls in December
Figures released by the Pension Protection Fund (PPF) revealed an improvement in the UK’s 7,400 defined benefit (DB) schemes in December, with the collective deficit falling to £33 billion in December from £92.5 billion the previous month.
The PPF said not only is this is an improvement on the month, it is significantly better than a year ago when the deficit stood at £191 billion.
The improvement was the result of stronger share prices and improved returns on Government bonds, said the PPF.
Figures show that the FTSE all-share index rose by 25% in the 2009 year, while the return on 15-year gilts grew by 0.71%.
“Over the past year, the rising equity markets and bond yields have led to an overall improvement of the funding position,” the PPF said.
Huge deficits have led blue-chip companies to close their final-salary pension schemes, and to existing members as well as new employees.
In the last few months alone, Vodafone, Tate & Lyle, Trinity Mirror, Dairy Crest, Barclays, BP and supermarket Morrisons all announced plans to close their final salary schemes.
Last April, the British subsidiary of the US insurance broker Aon said it planned to reduce its pension contributions to cut its costs – saying it needed to be “protected in challenging conditions”.
Recent figures from the Association of Consulting Actuaries estimated that 90% of final-salary schemes are now closed to new members, while almost one fifth of the schemes are now closed to future pension build-up from existing staff as well.
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