The deficit for the final salary pension plans of FTSE 100 companies is currently £40bn, according to actuaries at consultancy Deloitte.
The firm calculates that the lower prices of bonds typically used to benchmark pension liabilities have reduced the deficit by £35bn, after offsetting the effect of higher inflation.
Under the new International Accounting Standard for pensions, about half of the FTSE 100 companies have indicated in their latest accounts how long they expect a typical member to receive benefits when they retire.
Unlike in other countries, such as the US, there is a wide range of allowances being made in the UK for current and future improvements in life expectancy when valuing pension liabilities.
David Robbins, consulting partner at Deloitte, said: “Increasing uncertainty about future life expectancy is a key long-term risk for companies operating pension schemes, but in the short term it is the conditions in financial markets which create short-term volatility in company balance sheets – and a headache for the finance director.”
Many FTSE 100 companies have announced plans for accelerating the funding of their schemes in the past few months, to plug deficits.
Robbins warned that this strategy is unlikely to significantly reduce the volatility of pension deficits unless there is a widespread change in pension fund asset allocations.