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Final salary pension liabilities top £1tn

Final salary pension liabilities in the UK have topped £1tn, according to estimates by Aon Consulting.

Aon says combined liabilities of the 200 largest schemes have reached £500bn for the first time and estimates the liabilities of all 8,000 of the UK’s schemes are now over £1tn.

The accounting deficit of the top 200 schemes has remained fairly steady at £78bn at the end of August, up only slightly from £73 billion at the end of July, despite the recovering equity market.

Aon says declining corporate bond yields, which are starting to normalise, are largely causing the increase.

Aon Consulting head of corporate solutions Marcus Hurd says: “There could well be more bad news in the pipeline. Despite improving equity markets, the only real guarantee for pension funds is further volatility as gilts and bond yields are set to fluctuate.

“Closure is often the first step in pension scheme management, but the real benefits come after the high profile actions through a structured approach to removing and managing liabilities through risk management.”

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