JLT's monthly fund index update for the month of April 2016

03 May 2016

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 April 2016, JLT estimates the total DB pension scheme funding position as follows:

At 30 April 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£546bn

£640bn

(£94bn)

85%

FTSE 350 Companies

£617bn

£725bn

(£108bn)

85%

All UK Private Sector Pension Schemes

£1,249bn

£1,543bn

(£294bn)

81%

For comparison, the corresponding figures as at 30 April 2015 are as follows:

At 30 April 2015

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£554bn

£638bn

(£84bn)

87%

FTSE 350 Companies

£627bn

£722bn

(£95bn)

87%

All UK Private Sector Pension Schemes

£1,276bn

£1,538bn

(£262bn)

83%

Charles Cowling, Director, JLT Employee Benefits, comments:  “With interest rates staying stubbornly low, total pension scheme deficits are now almost breaking through the £300 billion barrier. More worryingly for companies and pension schemes with 2016 actuarial valuations, which are typically carried out around now, the pension scheme trustees are likely to calculate even higher pension deficits for the purposes of calculating future pension contributions.

“In the last couple of weeks two high profile companies – BHS and Tata Steel – have shown the potential pain of these pension deficits. If members of either or both of these company pension schemes end up in the Pension Protection Fund (PPF) they will inevitably end up with lower benefits and the PPF will have some large additional deficits to manage.

“In a recent interview, Alan Rubenstein, Chief Executive of the PPF, painted a bleak picture for pensions schemes and commented that schemes need to face up to the reality of the difficult position they face. He pointed out that there are three key areas that need to be addressed: trustees must engage with their employer and have some difficult conversations about what happens if interest rates remain stubbornly low; secondly, pension schemes need to focus on risk management and look for opportunities to reduce risk; finally we need to recognise that not all pension schemes will recover from the poor funding positions they are in and they need to start to plan for that eventuality now. Some may think these views are too challenging but Alan makes fundamental points that should be heeded by companies and trustees.”  

 - ENDS -

Notes to Editor

Enquiries:

Smithfield Consultants:

Fay Israsena | T: +44 (0)20 7903 0633| E: fisrasena@smithfieldgroup.com

Julia Cooke | T: +44 (0)20 7903 0674| E: jcooke@smithfieldgroup.com

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.jltemployeebenefits.com

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.jlt.com

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