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

03 October 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 September 2016, JLT estimates the total DB pension scheme funding position as follows:

At 30 September 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£609bn

£794bn

(£185bn)

77%

FTSE 350 Companies

£689bn

£899bn

(£210bn)

77%

All UK Private Sector Pension Schemes

£1,451bn

£1,954bn

(£503bn)

74%

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

At 30 September 2015

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£533bn

£606bn

(£73bn)

88%

FTSE 350 Companies

£601bn

£686bn

(£85bn)

88%

All UK Private Sector Pension Schemes

£1,203bn

£1,450bn

(£247bn)

83%

Charles Cowling, Director, JLT Employee Benefits, comments:

“This last month has seen a very slight easing of deficits from the record heights of over £500 billion reported at the end of August. There seems to be no relief in sight, however, for companies with large pension schemes and their pressed trustees. According to market prices, returns on gilts are expected to remain below 1.5% per annum for the next 20 years. Moreover, recent comments from the Bank of England have suggested that the next interest rate change could just as easily be downwards, making matters even more problematic for pension schemes.

“It is a very difficult environment in which companies have to negotiate with trustees on the funding of their pension schemes. Pension schemes with an actuarial valuation now are going to find it challenging to come up with a funding plan that will keep all parties happy. Inevitably there are going to be demands for some massive hikes in contributions and the question has to be asked can UK plc afford its own pension liabilities?

“Government and regulators are facing some troublesome choices: cutting pension benefits to members or reducing guarantees attached to benefits, which in a bad scenario such as an insolvency could mean members losing benefits, is going to be very unpopular with voters. But forcing companies to guarantee pension promises made many years ago when market conditions were different is going to result in dividends being scrapped, share prices falling and worse still, companies going bust. Changing how pension liabilities are valued, as some have demanded, does nothing to help the problem – it just sweeps it under the carpet for someone else to manage.”

-END-




Notes to Editor

Enquiries:

JLT Employee Benefits

Corinne Gladstone, PR Manager| T: +44 (0)20 7895 7705| E: corinne_gladstone@jltgroup.com

Smithfield Consultants:

Emily Cullen | T: +44 (0)20 7903 0641| E: ecullen@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