The aggregate funded status of FTSE 350 corporate pension funds dropped two percentage points in April to 84%, according to a report from Mercer.
Asset values increased to £557 billion ($856 billion) from £552 billion at the end of March, but high-quality corporate bond yields fell 27 basis points to 3.79%, resulting in total liabilities increasing £24 billion to £665 billion at the end of April. Total liabilities and the £108 billion pension deficit are the highest since March 2007, according to the report.
For the calendar year-to-date, the funded status has decreased four percentage points from 88% while the pension deficit has increased 50%.
“It will … be a surprise and disappointment to many that both liability values and deficits still managed to reach highs not seen for several years,” said Ali Tayyebi, senior partner and head of defined benefit risk in the U.K., in a news release. “The environment is proving particularly frustrating for many schemes who will have experienced significant improvements in their asset values but who feel that derisking into gilts does not look particularly attractive at current prices.”
