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

01 March 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 31 January 2018, JLT estimates the total DB pension scheme funding position as follows:

At 28 February 2018

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£667bn

£691bn

(£24bn)

97%

FTSE 350 Companies

£753bn

£785bn

(£32bn)

96%

All UK Private Sector Pension Schemes

£1,524bn

£1,629bn

(£105bn)

94%

For comparison, the corresponding figures as at 28 February 2017 are as follows:

At 28 February 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£673bn

£725bn

(£52bn)

93%

FTSE 350 Companies

£760bn

£823bn

(£63bn)

92%

All UK Private Sector Pension Schemes

£1,571bn

£1,751bn

(£180bn)

90%

Charles Cowling, Director, JLT Employee Benefits, comments:

“Once again, markets have been reasonably benign for pension schemes this month and overall reported pension deficits have continued to drift downwards. However, this positive picture masks ongoing challenges for a number of companies with large pension schemes, evidenced this week by news that the Toys R Us pension scheme will soon be following Carillion’s scheme into the Pension Protection Fund (PPF).

“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.

“Moreover, actuarial valuations currently being conducted are likely to show a need for significant increases in cash funding. This will come as a difficult message for both schemes and sponsors, at a time when the tension between funding deficits and paying dividends to shareholders has already spilled over. Indeed, at the most recent Work and Pension Select Committee meeting on Carillion, chair Frank Field challenged the Pensions Regulator’s (tPR) current approach to companies intent on “shovelling money to shareholders”.

“We expect tPR to take a tougher stance on companies prioritising dividends to shareholders over contributions to pension schemes in its 2018 Annual Funding Statement. TPR has been reported to be seeking "improved" powers to impose a schedule of contributions on DB pension schemes in the Government's upcoming and much anticipated pensions white paper.

“The positive news we can take from the recent examples of Carillion and Toys R Us is that the UK system of protections established in 2005, and most significantly the introduction of the PPF, have collectively meant that members’ pensions are now much better protected than they were. Hard as it is to see a company and a pension scheme fail, the presence of the PPF means that trustees can sleep easier knowing that the very large majority of members’ pension benefits will be paid to members – even if a company fails.”

- 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