Actuaries put UK’s pensions black hole at £130bn

The UK’s pensions black hole could be much larger than previously thought as new research claims UK business faces a £130bn shortfall in its pension funding.

This figure dwarfs pension commissioner Adair Turner’s estimates last year that £59bn was needed to fill the gap.

A report from the Association of Consulting Actuaries (ACA) reveals that 89% of businesses offering a final salary, or defined benefit, pension scheme do not have enough money in their scheme to meet their liabilities.

On average, schemes are only 85% funded, compared with an average funding level among smaller firms of 80%. Combined, these figures suggest that the deficit across UK companies could add up to more than £130bn.

Many of the companies questioned said they expected it to take at least a decade for them to make up the shortfall, with 44% saying it could take more than 11 years.

ACA chairman Adrian Waddingham said: “This latest survey report shows the immense efforts being made by many firms to meet the cost of pensions – costs that in many cases have increased far beyond what was expected when they set up their schemes.

“In part this is due to increased longevity and weak investment returns, but added regulatory and government-led enforced benefit improvements have not helped at all.”

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