The average FTSE 250 defined benefit pension fund reduced its allocation to bonds in 2014, said JLT Employee Benefits.
Analysis of the pension plans of the 250 largest companies in the U.K. found the average fund had a 52% allocation to bonds, down from 55% at year-end 2013. However, that was up from 49% five years ago. JLT said 22 of the 250 pension funds have altered their bond allocation by more than 10% in 2014.
Only 12 companies in the FTSE 250 still provide DB benefits to more than 5% of total payroll employees, and the total deficit in all FTSE 250 DB pension funds increased 71%, to £12 billion ($18.7 billion.)Total deficit contributions were £1.4 billion over the year, up from £1.2 billion the previous year. In total, 39 FTSE 250 companies reported significant deficit funding contributions in their most recent annual report and accounts.
However, DB pension funds still represent a material risk to their sponsors, with 17 of the FTSE 250 companies having total disclosed pension liabilities that are greater than their equity market value.
Of the 250 companies, 104 disclosed a pension deficit, and 37 showed a surplus. Total pension liabilities rose 2.8% to £73 billion. The analysis showed 108 companies have no DB pension liabilities.