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Rally halves DB deficit

Britain’s biggest companies have seen defined-benefit pension deficits fall by £26bn in the last 12 months as quantitative easing and the eurozone debt deal saw equ- ity markets to rally in October.

A monthly index of the funding position of UK DB schemes, by pension consultant JLT Pension Capital Strategies, shows the value of assets held by FTSE 100 pension funds rose from £401bn in October 2010 to £416bn last month. Liabilities fell by £11bn from £455bn to £444bn, with total deficits of FTSE 100 companies falling from £54bn to £28bn.

JLT Pension Capital Strategies managing director Charles Cowling says: “Now could be the time for trustees to take advantage of market opportunities and manage down liabilities via de-risking strategies.”

Hargreaves Lansdown head of advice Danny Cox says: “Markets remain volatile, gilt yields remain low and longevity costs continue to increase. At some stage, we will see interest rate rises, which will put pressure on gilt values and deficit levels of DB schemes.”

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