JLT's monthly fund index update for the month of April 2018

01 May 2018

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 2018, JLT estimates the total DB pension scheme funding position as follows:

At 30 April 2018

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£671bn

£686bn

(£15bn)

98%

FTSE 350 Companies

£757bn

£779bn

(£22bn)

97%

All UK Private Sector Pension Schemes

£1,539bn

£1,617bn

(£78bn)

95%

For comparison, the corresponding figures as at 30 April 2017 are as follows:

At 30 April 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£675bn

£715bn

(£40bn)

94%

FTSE 350 Companies

£762bn

£812bn

(£50bn)

94%

All UK Private Sector Pension Schemes

£1,541bn

£1,687bn

(£146bn)

91%

Charles Cowling, Director, JLT Employee Benefits, comments:

“Markets continue to be positive for pension schemes and overall reported pension deficits are showing a strong improvement from twelve months ago. Indeed, the FTSE 100 is close to showing an aggregate surplus in its pension schemes for the first time in almost a decade. This is despite the recent poor GDP figures suggesting the UK economy is on the brink of stagflation.

“Crucially though, for pension schemes, is the outlook for interest rates. It had been thought quite likely that the Bank of England’s Monetary Policy Committee would raise interest rates at their next meeting on May 10th but the latest weak GDP growth figures may once again have put back the date of the next interest rate rise. Additionally, the Bank of England is currently debating introducing greater clarity in its future interest rate plans, which would be of significant interest to pension schemes as they seek to plan and navigate their de-risking paths.

“This month has seen the latest annual funding statement from the Pensions Regulator. It contains a number of stark warnings that the Regulator will be taking a tougher stance on lengthy recovery plans and situations where dividends to shareholders are greater than deficit recovery contributions to pension schemes. The Regulator also gave a clear warning that it is prepared to flex its muscles and use its intervention powers if it is unhappy at how pension deficits are being managed.

“One of the key problems for many companies is that the pension deficit calculated by scheme trustees, which determines the cash funding required to be paid by the employer, is significantly greater than the pension deficit reported in the employer’s accounts.

“With both the latest Regulator funding statement and the Government’s White Paper on Protecting Defined Benefit Pension Schemes promising a tougher stance on pension funding and an increase in the protection of members’ benefits, now may be a good time for companies and trustees to take advantage of recent positive market conditions and reduce risk in their pension schemes.”

- ENDS -

In a whitepaper published last year year, JLT Employee Benefits has offered a number of recommendations to achieve what we believe would help to address those DB pension sustainability issues. If you’d like to request our whitepaper – please find a link here (JLT: How do we get out of this Pensions Black Hole?).  

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 3047 2530| 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 2015 had revenues of £167.4m 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 41 territories with some 10,600 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 141 countries.

www.jlt.com


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