The combination of rising equity markets and increasing bond yields reduced pension deficits for FTSE 100 companies by nearly £12bn during July 2005, according to consultancy Watson Wyatt.
This is the largest reduction in a single month since October 2003, and leaves the estimated aggregate deficit for the FTSE 100 at £55bn.
Stephen Yeo, a senior consultant at Watson Wyatt, said: “Although companies are contributing to their pension schemes at record levels, it is movements in the value of assets and liabilities that dominate the changes in the measure of pension deficits.
“In July, shares rose by 3%, and bond yields rose from their recent low point. However, the deficit is virtually unchanged over the first seven months of 2005.”
In addition, analysis by Watson Wyatt of figures produced by the Office for National Statistics shows that contributions to all company pension schemes reached a record £22.5bn in 2004. This is now more than five times the amount that was contributed by employees which, at £4.1bn, was itself a record.