The total deficit of U.K. defined benefit funds covered by the Pension Protection Fund's 7800 index increased 14.1% in July to £199.5 billion ($259.9 billion).
The deficit was £174.8 billion at the end of June.
Deficits also worsened for the year ended July 31, from £62 billion, said an update by the London-based PPF on Tuesday. The PPF is the lifeboat fund for the defined benefit plans of insolvent U.K. companies.
The funding ratio of the corporate pension plans declined to 89.9% as of July 31, down from 91% as of June 30. The funding ratio was 96.5% as of July 31, 2019, the update said.
Assets were flat during the month but rose 5% for the year ended July 31, to £1.77 trillion.
Liabilities increased 1.2% over the month and increased 12.6% for the year, to £1.97 trillion.
The FTSE All-Share index fell 3.6% for the month and fell 17.8% for the year ended July 31, the PPF said. Five- to 15-year index-linked gilt yields decreased 9 basis points in July and fell 27 basis points over the year.
As of July 31, 67.9% of the 5,422 pension funds covered by the index were in deficit, compared with 66.7% as of June 30. A year ago, 59.5% of the 5,422 pension funds were in deficit.
"Economic activity continued to rise in July on the back of lockdowns gradually being lifted, albeit slightly slower than anticipated due to increasing rates of new infections," Sion Cole, head of U.K. fiduciary business at BlackRock, said in an emailed comment about the figures. "Long-term inflation expectations rose further in July, leading to increased pension scheme liabilities. Risk assets experienced mixed performance, with positive performance from credit assets due to tightening spreads but mixed equity market performance with significant regional differences."
