The accounting deficit of FTSE 350 company defined benefit funds increased 65.3% to £81 billion ($115 billion) over the month of March, showed data from consultant Mercer.
Total assets for these pension funds increased 1.5% to £657 billion in the month ended March 31, while liabilities also increased by 6% to £738 billion.
The funded status ended March at 89%, vs. 93% as of Feb. 29.
In a statement accompanying the data, Ali Tayyebi, senior partner in Mercer’s retirement business, said a fall in corporate bond yields combined with an increase in the market’s view of long-term inflation pushed liability values to increase by over 5% in just one month. That corresponds to a 65% increase in deficit values, he said.
“Although the fall in corporate bond yields was significant, the difference between corporate bond yields and government bond yields remains somewhat higher than a year ago. All else being equal, any further narrowing of that gap exposes companies to a further increase in the pensions liabilities on their balance sheets,” he added.
The consultant’s data relates to about 50% of all U.K. pension fund liabilities.
