UK pension shortfall halved


UK pension shortfall halved
The overall deficit in the UK pension scheme has been halved in the last year, new research has claimed.

Aon Consulting has found that the overall shortfall now stands at £26 billion, down £22 billion from £48 billion in March 2006.

Many companies have closed final-salary pension schemes to new members and taken other steps to reduce their deficits.

The pension and benefits specialists noted that the figures should be viewed with caution, however, as the accounting deficits were measured using the FRS17 accounting standard tool which "fails to acknowledge underlying volatility".

Marcus Hurd, senior consultant and actuary at the firm, commented: "£10 billion swings in the national deficit have occurred from one week to the next. Indeed, companies reporting a few weeks earlier would have reported losses over the year at a time when the national deficit was almost double its current value at £50 billion.

"These kinds of results show the shortcomings of using a short-term basis to measure long-term obligations under FRS17."

However, Mr Hurd did note that the majority of firms with financial years running from March to March are likely to report considerable improvements to the deficit in their pension schemes.

Related categories: Insurance / Pensions.

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