A surge in the FTSE 100 index to over 6,000 has helped to knock nearly 25% off the pension fund deficits of the UK’s largest listed companies since the beginning of March, according to consultants Watson Wyatt.
The combination of rising bond yields and rising equity prices have pushed the schemes from being, on average, 84% funded (on the FRS 17 accounting basis) at the beginning of the month to being 88% funded today.
Stephen Yeo, a senior consultant at Watson Wyatt, said the upturn in the FTSE meant that pension deficits are now at their lowest level for three years.
“The combined pension deficit for FTSE 100 companies is £49.5bn – it was over £77bn just two months ago,” he said.
“This is certainly one very positive piece of news on the eve of National Pensions Day and it should be welcomed by pension scheme members and the employers who provide them.”