JLT's monthly fund index update for the month of June 2017

03 July 2017

Pension scheme deficits decrease; Regulator shows teeth

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 June 2017, JLT estimates the total DB pension scheme funding position as follows:

At 30 June 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£666bn

£712bn

(£46bn)

94%

FTSE 350 Companies

£751bn

£809bn

(£58bn)

93%

All UK Private Sector Pension Schemes

£1,560bn

£1,736bn

(£176bn)

90%

For comparison, the corresponding figures as at 30 June 2016 are as follows:

At 30 June 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£612bn

£673bn

(£61bn)

91%

FTSE 350 Companies

£694bn

£766bn

(£72bn)

91%

All UK Private Sector Pension Schemes

£1,435bn

£1,644bn

(£209bn)

87%

Charles Cowling, Director, JLT Employee Benefits, comments: 

“This last month has seen a General Election and more political turmoil, yet markets continue to hold up well. As a result, DB pension deficits are drifting lower.

“However, recently we have seen increasing evidence of the Pensions Regulator’s (TPR) willingness to flex its muscles when it comes to the funding of pension schemes. Only this week TPR announced that it has recovered over £1 billion for DB schemes using its anti-avoidance powers. This was on top of its recent annual funding statement in which TPR said that they would intervene in circumstances where they thought total payments to shareholders were being prioritised over funding the pension scheme.

“Given too that TPR has just been granted £3.5m of additional funds to boost its compliance and enforcement work, it is evident that companies and trustees can expect a lot more scrutiny from the Regulator going forward.

“Many pension schemes will be carrying out actuarial valuations now and beginning to agree new deficit recovery contributions. Even though deficits may have improved a little in recent months, for many pension schemes they will still be much higher than in 2014 when deficit contributions were last agreed.

“So, there may still be some very difficult discussions between companies and trustees over the coming months. But maybe the current respite delivered by buoyant markets is an opportunity for trustees and companies to explore liability settlement options for DB pension schemes, before market conditions turn and deliver another unwelcome surprise.”

- ENDS -

In a recently published whitepaper, 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:

Julia Cooke | T: +44 (0)20 7903 0631| 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 41 territories with some 10,600 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