The total deficit of all U.K. corporate defined benefit funds increased 0.5% in May to £183 billion ($235 billion), but fell 5.7% for the year ended May 31, said JLT Employee Benefits.
The consultant's latest monthly index showed the funded level of these plans was flat for the month at 90%, but improved from 87% a year earlier.
Total assets were £1.6 trillion as of May 31, up 1.9% for the month and 18.5% for the year. Liabilities grew 1.7% for the month and 15.6% for the year to £1.78 trillion.
The 100 largest companies in the U.K. saw pension fund deficits rise 5% for the month and 8.6% for the year, to £63 billion. The funded level was flat for the month at 91%.
FTSE 350 company deficits grew 4.2% for the month and 8.8% for the year to total £74 billion. The funding level was flat in May for the month and the year at 91%.
Charles Cowling, director at JLT Employee Benefits, said in a news release: “As Britain prepares to go to the polls, we note that pensions have not been a key battleground for the main political parties — or at least not the issues surrounding hard pressed defined benefit pension schemes in the private sector. However, for many companies the management of their DB pension liabilities is their single biggest headache.”
“So, while markets are calm at present and deficits are relatively stable, DB pension schemes still have much to worry companies and shareholders. Moreover, with a general election and Brexit looming there is still the potential for markets to add to these woes. Companies would do well therefore to look for opportunities to decrease or settle DB liabilities. For those few companies still allowing employees to earn additional DB benefits, 2017 is likely to be the year that they finally pull plug on this once much treasured and ubiquitous employee benefit,” Mr. Cowling added.
