The aggregate deficit of the 200 largest U.K. corporate defined benefit pension funds fell 26% in July to £74 billion ($116 billion), down from £100 billion as of June 30, according to a monthly estimate by Aon Consulting.
Strong equity returns and rising corporate bond yields in the month combined to bring deficits down to the lowest level so far in 2010, according to Aon.
Separately, the aggregate deficit for defined benefit pension funds in the FTSE 350 held steady at £85 billion for the quarter ended June 30, according to Mercer's quarterly Pension Risk Update report.
As of June 16, equity returns and rising corporate bond yields lowered the aggregate deficit to £60 billion. However, in the final weeks of the quarter, pension fund asset values plummeted a combined £10 billion, while falling bond yields increased deficits a further £15 billion.
“The ‘saving grace' for defined benefit pension schemes was a fall in the expected future level of inflation,” Deborah Cooper, Mercer principal and head of the retirement research group, said in a news release.