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Pension Funds

U.K. corporate pension funding gains in month, year

The total deficit of all U.K. corporate pension funds improved 4.7% in January and 16% for the year ended Jan. 31, to £102 billion ($134 billion), according to an update by JLT Employee Benefits.

The funded level of corporate pension funds was 94% for the month ended Jan.31 — up from 93% in December and 93% as of Jan. 31, 2018.

Pension fund assets increased 2% for the month and 0.5% for the year to £1.560 trillion. Liabilities grew 1.7% in January but fell 0.72% for the year, to £1.662 trillion.

FTSE 100 firms saw deficits increase 5% in January but drop 40% for the year, to £21 billion. The funded level was 97% as of Jan. 31, flat since December and rising from 95% a year earlier.

For FTSE 350 companies, deficits were £29 billion and flat for the month, improving 34% for the year. The funded level was 96% over the month, remaining flat since December and advancing from 95% as of Jan. 31, 2018.

"Despite the political turmoil in Westminster and across the EU, the start of 2019 has seen little change to the aggregate position for FTSE 100 pension schemes, which continue to show a modest overall deficit. Markets seem to be holding their breath as the political dance around Brexit becomes ever more tortuous," Charles Cowling, chief actuary at JLT Employee Benefits, said in a news release.

Mr. Cowling thinks the outlook for pension deficits depends on the outcome of the Brexit negotiations. While the risk of more volatility and higher pension deficits remains high, a number of pension funds managed to successfully navigate the turbulent markets, Mr. Cowling said, adding, "Others are still trying to de-risk their pension schemes and hoping for favorable market opportunities to emerge."