Britain’s pension funds dropped by £27bn to create a £15bn deficit after the latest stock market dive.
The biggest drop in the stock market since the eve of the Iraq war saw the value of shares fall by £60bn in a single day’s trading, leading to the £12bn surplus in pension funds that had been built up being eradicated.
While some pension experts say a further fall could force companies to raid reserves and top up their occupational schemes, some firms may refuse to help out if they are in a fragile financial state.
But the National Association of Pension Funds, representing member schemes holding assets of around £800bn, or one-fifth of investment in the UK stock market, believes the recent drop will have limited impact.
NAPF chief executive Joanne Segars said today: “Pension funds are long-term investors and they will set their funding strategies in accordance with their long term liabilities, not short-term market moves, so there is no reason to think that the stock market falls of the last few days will have a significant impact on pension provision”.