Pension pots at top firms overflowing due to rising inflation

The UK’s largest 200 pension funds moved into a £3bn surplus at the end of October – helped by rising inflation.

Despite the Bank of England keeping consumer prices inflation below 2%, most pension schemes invest in assets that grow with the retail price index – which was almost 4% over the last year.

This inflation increased the value of pension scheme assets more than it increased their liabilities, according to pension specialist Aon Consulting.

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Half of the top 200 pension funds are now in surplus, with the expected cost of UK final salary pension scheme benefits down by around £10bn in 12 months, according to Aon.

Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “The environment of higher inflation is easing the burden on UK pension schemes, because many schemes benefit from inflation-related investment returns while paying out benefits that are not fully linked to inflation.”