Pensions deficits reach new high, says PPF
Published: 12th Jun 2012 11:32:15
The finances of the UK's final-salary pension schemes took a dramatic turn for the worse last month, figures show.
The Pension Protection Fund (PPF) said pension deficits reached a new high point in May, of £312bn.
It said that the collective deficit of the 6,432 defined-benefit schemes in the private sector jumped by £95bn that month.
This means that these schemes have only 77% of the assets they currently need to pay their pensioners.
In the past year the value of scheme assets has risen, from £989bn to £1,031bn.
But at the same time, the finances of many schemes have deteriorated sharply, because of a one-third rise in the estimated cost of paying for pensions, to £1,343bn.
The PPF explained that this was due to a further deterioration in the yield, or return, on government bonds.
"Over the month, 15-year gilt yields fell by 0.55 percentage points, which resulted in liabilities increasing by 7.6%," the PPF said.
"Over the year to May 2012, 15-year gilt yields were down by 1.73 percentage points," it added.
The valuation of pension scheme liabilities - their obligation to pay current and future pensioners - involves an assumption that the returns they earn for their members will be in line with the return on government bonds, even if the assets are more widely invested in shares, property and cash.
The National Association of Pension Funds (NAPF) has previously blamed the Bank of England's policy of quantitative easing for much of the recent ballooning of deficits.
The policy has been explicitly aimed at driving up the price of government bonds, which in turn depresses the returns they provide to investors, such as pension funds.
Only 929 of the 6,432 schemes monitored by the PPF are currently thought to be in surplus.
A year ago the collective deficit of all schemes was only £25bn.
At 12:58:39 in EnglandA poem about the killing of PC Keith Blakelock during riots in north London was written by the man accused of his murder, a court has heard.
At 12:58:21 in SportKent have announced a pre-interest and pre-tax profit of £156,778 for the financial year to November 2013.
At 12:56:04 in ScotlandA hamster has been found abandoned inside a plastic play tube in Edinburgh.
At 12:55:09 in BusinessThe sometimes fraught relationship between leaseholders and their freeholders is going to be investigated by the Office of Fair Trading (OFT).
At 12:54:04 in HeadlinesIndia's Supreme Court has ordered the continuing detention of businessman Subrata Roy and asked his firm to come up with a plan to repay its investors.
At 12:53:21 in SportCrystal Palace winger Jason Puncheon has been fined £15,000 by the Football Association and warned about his future conduct for Twitter comments he made in relation to former boss Neil Warnock.
At 12:52:43 in HeadlinesA second witness at the murder trial of South African athlete Oscar Pistorius has told a court in the capital Pretoria she was awoken by the sounds of a fight early on 14 February 2013.
At 12:42:01 in PoliticsThere is a risk that "deliberate provocation" could give rise to a dangerous incident in Ukraine, Foreign Secretary William Hague has warned.
At 12:41:48 in EnglandA residential treatment programme for addicts which closed in Yeovil is to reopen after the charity running it merged with another organisation.
At 12:40:03 in ScotlandPolice Scotland has exceeded its target to recruit 1,000 additional officers.
Harvard CitationBBC News, 2012. Pensions deficits reach new high, says PPF [Online] (Updated 12th Jun 2012)
Available at: http://www.ukwirednews.com/news/1434050/Pensions-deficits-reach-new-high-says-PPF [Accessed 8th Mar 2014]
News In Other Categories
India's Supreme Court has ordered the continuing detention of businessman Subrata Roy and asked his firm to come up with a plan to repay its investors.
A poem about the killing of PC Keith Blakelock during riots in north London was written by the man accused of his murder, a court has heard.
Two hospitals missed opportunities to take action against a consultant breast surgeon who was performing unnecessary or incomplete operations, a review has found.
Apple has unveiled its new iPhone technology for cars at the Geneva Motor Show.
Fawlty Towers star Prunella Scales has "a sort of mild Alzheimer's", her husband Tim West has revealed in the Radio Times.
Kent have announced a pre-interest and pre-tax profit of £156,778 for the financial year to November 2013.