JLT EB Funding Level Update February 2015

28 February 2015

Latest Monthly Update

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) used in company reports and accounts.

As at 28 February 2015, JLT estimates the total DB pension scheme funding position as follows:

At 28 February 2015  Assets  Liabilities  Surplus/ (deficit)  Funding Level
 FTSE 100 Companies  £560bn  £645bn  (£85bn)  87%
 FTSE 100 Companies  £634bn  £731bn  (£97bn)  87%
 All UK Private Sector Pension Schemes  £1,270bn  £1,525bn  (£255bn)  83%

 For comparison, the corresponding figures as at 28 February 2014 are as follows:

 At 28 February 2014  Assets  Liabilities  Surplus/ (deficit)  Funding Level
 FTSE 100 Companies  £516bn  £569bn  (£53bn)  91%
 FTSE 100 Companies  £583bn  £644bn  (£61bn)  91%
 All UK Private Sector Pension Schemes  £1,149bn  £1,306bn  (£157bn)  88%

Charles Cowling, Director, JLT Employee Benefits, comments:

“The Alice in Wonderland world of negative interest rates seems to be expanding, spreading from Switzerland right across the Eurozone. In the last few weeks Germany, France and Finland have all been able to sell negative yielding debt with terms of up to 5 years. This in turn is putting huge pressure on insurance companies and pension schemes with fixed liabilities and ever fewer opportunities for generating the levels of low-risk investment returns that are needed to meet these liabilities.   “As a consequence the burden of growing pension deficits is increasingly visible in the accounts of companies with large DB pension schemes. Across all UK DB pension schemes, the total deficit (on the IAS19 accounting basis) has grown in the last 12 months by £100bn to over £250bn.     “The even lower interest rates we now see in the UK could prove particularly problematic for pension schemes with actuarial valuations in 2015 – typically the actuarial valuation takes place every 3 years and this is when decisions are made on deficit funding.  Demands from pension scheme trustees for more cash payments into DB pensions look set for significant escalation in 2015.”

- ENDS -

Notes to Editors 

Enquiries:

Smithfield Consultants:

Fay Israsena

fisrasena@smithfieldgroup.com

+44 (0)20 7903 0633

Julia Cooke

jcooke@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/
contact Charles Cowling
Director charles_cowling@jltgroup.com 0161 242 5388