View more on these topics

DB funds end 2016 with £560bn deficit


The combined deficit of UK defined benefit pension funds stood at £560bn at the end of 2016, £90bn higher than at the start of the year, according to PWC.

The PWC Skyval Index, published today, says if companies tried to fix the additional deficits that arose in 2016 within 10 years, it would cost an extra £10bn per year.

The index is based on the Skyval platform used by pension funds and gives an update on the health of the approximately 6,000 DB pension funds in the UK.

DB pension funds had assets of £1,480bn at December 2016 and liabilities of £2,040bn.

A Brexit beating

The index has also tracked the impact of political events and policy decisions on DB deficits in 2016.

The Brexit vote had the biggest short-term impact on DB pension deficits in 2016 with an £80bn increase from 23 June to 24 June.

However, the deficit shifted from £620bn immediately before the US presidential election in November to £610bn immediately after.

DB pensions were also impacted by the Bank of England’s interest rate cut and quantitative easing announcement on 4 August with pension asset values increasing by £60bn over the following week, due to significant rises in bond and equity markets, but pension funding targets increased by more than double that amount (£130bn).

Dealing with deficits

PWC global pensions head Raj Mody says 2017 will see pension fund trustees and sponsors reach more informed conclusions about how to tackle their pension deficit.

Mody says: “Those involved are increasingly realising the importance of transparency in order to decide appropriate strategy. DB pensions are long-term commitments stretching out over several decades and so there is limited value in pension funds making decisions based on simplified information.”

He adds: “There is a need to understand the cashflow profile of the fund year-by-year, not just summarised figures. While the aggregate deficit for DB pensions appears to have deteriorated considerably over 2016, the impact for individual funds will vary.”



‘Nuclear deterrent’ against DB failure needed, MPs say

The Pensions Regulator needs a “nuclear deterrent” to stop companies dodging their pension scheme responsibilities, according to a group of MPs. Publishing its report into defined benefit pensions this morning, the work and pensions select committee says Govt should consult on giving TPR the power to triple the fines it can currently levy. The MPs […]

Pensions-savings-retirement-piggy bank

Many DB schemes are ‘just treading water’

The Pension Protection Fund says little progress has been made in closing a total £222bn deficit on UK defined benefit schemes, with many schemes “just treading water”. In its latest data on the trends in DB pension schemes, the PPF says the deficit across 5,794 schemes feel slightly from £244.2bn at the end of March […]


IFAs back ‘sheen of suitability’ DB transfer concerns

Advisers have backed concerns raised by former FCA technical specialist Rory Percival that some firms may be putting a “sheen of suitability” on defined benefit pension transfers. In a blog post last week, Percival said he was worried some advisers thought a DB transfer was “ticking a box” if the client wanted flexible benefits and […]

Can you put a hat on?

By Sarah Scott, marketing consultant You might think the question in the title is a strange one. Perhaps even more so when you learn that it’s one of several asked as part of an assessment for Employment Support Allowance eligibility in the opening scenes of the 2016 film, ‘I, Daniel Blake’. Daniel is a carpenter […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm