Better News for UK Pension Funds Jan 2010

[julian snell]

The financial position of the UK's 7,400 private final salary pension schemes has improved sharply.

Their collective deficit fell from £93bn to just £33bn during the course of December, the Pension Protection Fund (PPF) said.

That was a big improvement on the position a year ago when their deficit stood at £191bn.

The PPF said the improvement was due to higher share prices and improved returns on government bonds.

"During the month of December there was a 2% increase in assets due to rising UK and global equities," the PPF said.

At the same time, higher returns on UK government bonds - called gilts - meant that the cost of paying for pensions in the future dropped by nearly 6% in just one month.

"Over the past year, the rising equity markets and bond yields have led to an overall improvement of the funding position," the PPF said.

"In addition, the change in actuarial assumptions in October 2009 reduced estimated liabilities by around £70bn," it added.

The PPF said that in the year to the end of December the FTSE all share index rose by 25%, while the return on 15-year gilts rose by 0.71%.

As a result, there are now just over 2,000 schemes - 27% of the total - which are in surplus.
Source:Pension Protection Fund website.