The deficit of FTSE 350 company defined benefit funds increased 36% in August and more than doubled over the year ended Aug. 31, increasing 158.9% to £189 billion ($251 billion), said Mercer.
The consultant's latest data show that deficits also increased over the month due to falling corporate bond yields.
Assets increased 16.6% over the year, and 2.8% over the month ended Aug. 31, to £737 billion. However, increases in liabilities more than offset growth in assets. Liabilities increased 31.3% over the year and 8.2% for the month, to total £926 billion as of Aug. 31.
“Despite an increase in asset values over the month, August saw the biggest monthly rise in deficits since records began,” said Ali Tayyebi, senior partner in Mercer's retirement business, in a statement accompanying the data. “Our reference long-dated corporate bond yield has now fallen below 2% per annum, for the first time representing yet another milestone into uncharted territory.”
Mercer's data relate to about 50% of all U.K. pension scheme liabilities.
