JLT EB Funding Level Update June 2015

01 January 0001

1 July 2015: JLT Employee Benefits (JLT) has updated its monthly index, showing the funding position of all UK private sector defined benefit (DB) pension schemes under the standard accounting measure (IAS19) used in company reports and accounts.

As at 30 June 2015, JLT estimates the total DB pension scheme funding position as follows: 

At 30 June 2015  Assets  Liabilities  Surplus/ (deficit)  Funding Level
 FTSE 100 Companies  £536bn  £614bn  (£78bn)  87%
 FTSE 100 Companies  £606bn  £696bn  (£90bn)  87%
 All UK Private Sector Pension Schemes  £1,244bn  £1,477bn  (£253bn)  83%
 For comparison, the corresponding figures as at 30 June 2014 are as follows:
 At 30 June 2014  Assets  Liabilities  Surplus/ (deficit)  Funding Level
 FTSE 100 Companies  £517bn  £576bn  (£59bn)  90%
 FTSE 100 Companies  £582bn  £650bn  (£68bn)  90%
 All UK Private Sector Pension Schemes  £1,159bn  £1,333bn  (£174bn)  87%

Charles Cowling, Director, JLT Employee Benefits, comments: “As we come ever closer to a “Grexit” from the Euro, the rattled financial markets certainly aren’t helping the funding position of pension schemes.  

“Total pension scheme deficits are slightly down on a month ago, but deficits are still significantly higher than a year ago. There are signs that pension schemes are increasingly implementing LDI solutions to hedge out interest rate and inflation risks – even though this means “locking in” to current yields. But with markets looking increasingly uncertain, companies and trustees are quite reasonably concluding that running significant risks on interest rates and inflation (and thereby betting against market prices) is a mug’s game which is best avoided.

“Even if LDI solutions are increasingly reducing interest rate and inflation risks, companies and trustees are still in for a “white knuckle ride” in markets, as pension scheme deficits swing up and down with every twist and turn in the saga of Greece, its debts and the European currency union. Beware Greeks bearing gifts (or bailout proposals) seems to be the lesson being taken to heart by the EU – and possibly too by companies and trustees of DB pension schemes.”

- ENDS -

At 31 July 2014
contact Charles Cowling
Director charles_cowling@jltgroup.com 0161 242 5388