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

01 November 2017

Pension scheme deficits decrease

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

At 31 October 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£673bn

£712bn

(£39bn)

95%

FTSE 350 Companies

£760bn

£809bn

(£49bn)

94%

All UK Private Sector Pension Schemes

£1,586bn

£1,740bn

(£154bn)

91%

For comparison, the corresponding figures as at 31 October 2016 are as follows:

At 31 October 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£643bn

£738bn

(£95bn)

87%

FTSE 350 Companies

£729bn

£841bn

(£112bn)

87%

All UK Private Sector Pension Schemes

£1,527bn

£1,809bn

(£282bn)

84%

Charles Cowling, Director, JLT Employee Benefits, comments: 

“Despite concerns over rising inflation, buoyant equity markets have continued to deliver good news for DB pension schemes as pension deficits continue to drift lower.

“This month has seen the Consumer Prices Index measure of inflation hit 3% for the first time since 2012, largely due to the weak pound after the Brexit vote. As a result, the Governor of the Bank of England, Mark Carney said that it was ‘more likely than not’ that he would soon be writing to the Treasury to explain his failure to keep inflation within 1% of its target of 2%.

“In responding to questions from the Commons Treasury select committee, Carney also gave further indications of an impending interest rate rise. Referring to the balance between targeting rising prices and keeping interest rates low to support jobs and activity, he said that the ‘trade-off has moved away’ from using interest rate policy to support employment.

“Of course, after nearly 10 years of painful reductions, rising interest rates will be seen as a relief for pension schemes as it will reduce the value attached to their liabilities. As a result many will be hoping to see continued reductions in pension deficits.

“However, many challenges still remain. Pension schemes which are carrying out actuarial valuations in 2017 are likely to show bigger deficits than in 2014, and finance directors, will therefore be facing trustees asking for ‘more please’. But, for now, trustees and finance directors may wish to take advantage of these slightly calmer waters to explore opportunities to offload and settle pension liabilities.”

- ENDS -

In a whitepaper published earlier this 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 click 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