UK Pension Deficits Stand at £210 Billion

(May 5, 2010) — According to a report by Pension Capital Strategies (PCS), the combined deficit of all UK private sector pension schemes is £210 billion, compared with £115 billion last year.

Pension obligations to retired staff and to current and future employees are one of the most pressing issues that British companies face, and experts say increasing life expectancy will aggravate the situation, The Telegraph reported.

“We have seen a big recovery in equity markets in the last year, with UK equities producing an investment return of nearly 40% in just 12 months,” said spokesperson Charles Cowling of PCS, an advisory group that is owned by insurer Jardine Lloyd Thompson. “Despite this impressive investment performance leading to some big asset gains, DB pension liabilities have grown even faster.”

The total pension deficit at Britain’s largest 100 firms was £73 billion at the end of April from £52 billion last year. The defined schemes of those 100 companies had assets of £390 billion but liabilities of £463 billion.

FTSE350 companies also faced increasing deficits this year, with the deficit up to £88 billion at the end of last month from £60 billion a year earlier.

In sum, “…2010 looks like it will not be an easy year for UK pension schemes,” said Cowling.