The total deficit of U.K. defined benefit funds covered by the Pension Protection Fund's 7800 index increased to £74.7 billion ($97.5 billion) at the end of January, from a deficit of £10.9 billion at the end of December.
The position is worse than a year ago, when the pension funds in the London-based PPF's index recorded a deficit of £23.1 billion as of Jan. 31, 2019, according to a report Tuesday from the PPF.
The funding ratio of pension plans declined over the month to 95.9% as of Jan. 31 from 99.4% as of Dec. 31. The funding ratio was 98.6% a year ago, the update said.
Assets increased 2% during the month and rose 8.2% for the year ended Jan. 31, to £1.733 trillion. Liabilities increased 5.6% over the month and increased 11.2% for the year to £1.808 trillion.
The PPF said in its update that the FTSE All-Share index fell 3.2% for the month but improved 10.7% for the year ended Jan. 31. Five- to 15-year index-linked gilt yields fell 16 basis points in January and 52 basis points over the year.
As of Jan. 31, 60% of the 5,422 pension funds covered by the index had a deficit, compared with 55.3% as of Dec. 31. A year ago, 58.5% of the 5,450 pension funds covered by the index had a deficit.
"It appears that global markets are not immune to the coronavirus outbreak," said Vishal Makkar, head of retirement consulting at Buck in the U.K., in an emailed comment. "The situation in China ... has cast a shadow over the start of the year and has led to concerns about the potential impact on the global economy. Combined with this uncertainty," he said, "a sharp fall in gilt yields, which followed the post-election bump (in the U.K.), has seen liabilities climb in January."
