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Rollercoaster ride ends up with pension schemes in surplus

UK pension schemes have moved into surplus for first time in over five years, according to research from Aon Consulting.

At the end of last week, there was an aggregate UK pension accounting surplus for the first time since FRS17 was introduced in June 2001. This landmark date marks more than a 50bn improvement in FRS17 scheme net valuations in two months.

Aon says there has been a remarkable degree of vola-tility in the aggregate deficit over the last three months, starting with the biggest single-day increase in pension deficits of 11bn after market turmoil in China on February 27. At its recent peak, the aggregate deficit stood as high as 50bn in March.

The aggregate deficit for the 200 biggest pension funds has cleared while equivalent figures for FTSE 100 companies also show an improvement to a surplus of 1bn.

The improvements in the aggregate position for UK pension schemes has arisen primarily from increases in bond yields, the benchmark measure of pension scheme deficits for accounting purposes, although strong investment performance has also served to improve the position.

Aon Consulting senior consultant & actuary Marcus Hurd says: “This is a momentous day for UK pension schemes, because the average UK pension fund is now likely to be in surplus.’

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