JLT EB Funding Update December 2013 - Latest Monthly Update 

01 January 2014

JLT Employee Benefits (JLT EB) 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 / FRS17) used in company reports and accounts.

As at 31 December 2013, JLT EB estimates the total DB pension scheme funding position as follows:

At 31 Dec 2013 

Assets 

 Liabilities

 Surplus/(Deficit)

 Funding Level

 FTSE 100 Companies

 £503bn

 £560bn

 (£57bn)

 90%

 FTSE 350 Companies

 £566bn

 £629bn

 (£63bn)

 90%

 All UK Private Sector Pensions Schemes

 £1,133bn

 £1,283bn

 (£150bn)

 88%

For comparison, the corresponding figures as at 28 February 2013 were:

At 31 Dec 2012

Assets 

 Liabilities

 Surplus/(Deficit)

 Funding Level

 FTSE 100 Companies

 £459bn

 £508bn

 (£49bn)

 90%

 FTSE 350 Companies

 £522bn

 £577bn

 (£55bn)

 90%

 All UK Private Sector Pensions Schemes

 £1,071bn

 £1,243bn

 (£172bn)

 86%

Charles Cowling, Director of JLT Employee Benefits comments: 2013 has proved to be a tough year for UK defined benefit pension schemes. Deficit levels remain stubbornly high despite strong equity markets and significant cash contributions from sponsoring employers. Most of the improvements experienced over the year have been cancelled out by the sharp increase in inflation expectations earlier in the year.

Fortunately there has been some good news. Increases in gilt yields since April have led to lower values being placed on liabilities which will reduce deficits for schemes with more recent valuation dates. This should help to reduce cash contribution requirements for recovery plans being agreed in the New Year.

In the last five years, since the financial crisis, the equity market has performed strongly with the FTSE100 up 52% since 31 December 2008, but for pension schemes there has been no such cheer with the total deficit in the pension schemes of FTSE100 companies up by £71 billion over the same period.

The Pensions Regulator outlined its new approach to the funding of defined benefit pensions scheme in a recent consultation document. This highlights that the Regulator will be more flexible and responsive to employers' needs to invest and grow their businesses.

Employers continue to remove pension risk from their balance sheets through a variety of methods including pensioner buy‐ins, longevity swaps and further closures to future accrual.

In addition there have been some exciting ideas on pension scheme design raised as part of the Defined Ambition consultation.

What will 2014 bring? Potentially more of the same. It is not clear how markets will react as the UK economy continues to strengthen. Counter‐intuitively a stronger economy may lead to increased insolvencies and debt compromises as the banks take the opportunity to realise cash where it is available. The key is for employers to closely monitor their pension scheme risks and be in a position to take advantage of any opportunities as they arise."

-END-

Notes to Editors 
Enquiries: 

JLT Employee Benefits: 
Jennifer Warner
jennifer_warner@jltgroup.com 
+44 (0)1344 464 582

Smithfield Consultants:
Andrew Wilde
awilde@smithfieldgroup.com
+44 (0)20 7903 0661  

Ged Brumby
gbrumby@smithfieldgroup.com 
+44 (0)20 7903 0674 
 
About JLT Employee Benefits 

JLT Employee Benefits is one of the UK's leading employee benefit providers offering a wide range of benefit and pension services, including administration, actuarial and pension consultancy, investment, Self Invested Personal Pensions (SIPPs) and Small Self Administered Schemes (SSASs) administration, flexible benefits, healthcare, benefit communication and financial education.
JLT Employee Benefits employs over 2,200 professionals throughout the UK and in 2013 had revenues of £172m in UK & Ireland.
Pensions and employee benefits companies within the JLT Employee Benefits group of companies include: JLT Benefit Solutions Ltd, Profund Solutions Limited, JLT Wealth Management Limited, JLT Investment Management Limited and Independent Trustee Services Limited. JLT Employee Benefits is part of Jardine Lloyd Thompson Group plc.
www.jltgroup.com/eb

About Jardine Lloyd Thompson Group plc 

Jardine Lloyd Thompson is one of the world's largest providers of insurance and employee benefits related advice, brokerage and associated services. JLT's client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.
JLT is quoted on the London Stock Exchange and owns offices in 39 territories with some 9,000 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.
www.jltgroup.com/