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£155bn gap in pensions

31 Dec 08

Company pension schemes in the UK are coming under increased pressure according to the government body set up to provide a safety net when companies go bust

Company pension schemes in the UK are coming under increased pressure according to the government body set up to provide a safety net when companies go bust.

Figures from the Pension Protection Fund show the total shortfall of UK underfunded company schemes – which account for 86 per cent of final salary pensions – rose to a record £155 billion at the end of November.

This represented a rise in the shortfall of £30 billion in November alone, mainly due to falling stock markets and lower yields on government gilts. The shortfall is nearly three times bigger than it was at the end of November 2007.

The aggregate funding position (total assets minus total liabilities) of almost 7,800 final salary funds is estimated to have worsened over the month to a deficit of £136 billion at end-November 2008, from a deficit of £97.3 billion at end-October 2008. There was a surplus of £26.1 billion in November 2007.

The total deficit of schemes in deficit in November 2008 is estimated to have worsened to £155 billion from £122.1 billion at the end of October 2008. In November 2007, the aggregate deficit of all schemes in deficit stood at £58.3 billion.

In November 2008, the total surpluses of schemes in surplus fell to £19.0 billion from £24.7 billion at the end of October 2008. In November 2007, the total surplus of all schemes in surplus stood at £84.4 billion.

The PPF index can be downloaded from www.pensionprotectionfund.org.uk

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