UK listed firms in the FTSE350 cut their pension deficits by £16 billion (€18 billion) in a single month in May.
The pension funding gap stood at £34 billion at the end of the month reflecting a dramatic fall over the last two years. In September, for example, the gap stood at £156 billion, according to research by Mercer, a pensions and investments consultancy.
May’s fall represented a further 30% in the fall.
Alan Baker, chair of Mercer’s defined benefit policy group, said: “This is great news for both pension schemes and company sponsors with yet another reduction in the pension gap, but we must not be complacent. Market swings could dramatically reverse these improvements and have done so in the past.”
In May, asset valuations increased by £15 billion to £791 billion, while liabilities reduced by £1 billion to £825 billion, as a result of a fall in the expectation of inflation offset by lower corporate bond yields.
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