Pension deficits swell as market falls

Empty purse 410The combined deficits of final salary pension schemes at the UK’s FTSE 350 companies more than doubled in the past month.

From 7 July to 4 August, the collective deficit soared from £27bn (€30.9bn) to £66bn, as stock markets tumbled globally, according to figures from the human resource consultancy Aon Hewitt.

Marcus Hurd, principal consultant at Aon Hewitt, said: “After steady improvements in 2011 so far, the total deficit has now fallen back to its October 2010 level, potentially wiping out any gains made over that period.”

"Pension schemes are a long-term investment, but short-term volatility such as this is hard to ignore,” he added. “These dramatic swings will focus the minds of finance directors and trustees even more on the importance of de-risking."

The figures stand in stark contrast to activity in 2010, when pension deficits were substantially reduced.

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