UK - Pension fund surpluses reached an all-time high in February thanks to a widening in AA-bond spreads, but pensions consultant Aon is warning proposed regulations could turn UK surpluses into a £180bn (€235bn) deficit.

Figures collated for the firm's monthly Aon200 index - tracking the UK's 200 largest privately-owned final salary pension schemes - show schemes shifted from a £12bn deficit in January to a £21bn surplus, placing over 62% of schemes in surplus under existing accounting requirements.

However, that surplus would drop to a £180bn deficit if scheme positions were recalculated to follow the proposed accounting rules from the Accounting Standards Board (ASB) and the mortality assumption adjustment suggested by The Pensions Regulator, argues Aon, meaning few, if any, schemes would remain in surplus under current funding levels.

More specifically, a requirement to record pension deficits in a company's accounts at risk-free rates will add £120bn to the deficits, while TPR proposals for more prudent mortality assumptions would likely add £75bn to reported liabilities, according to Marcus Hurd, senior consultant and actuary at Aon Consulting.

"There are two sixes to the final salary story in February: on the positive side, after record falls in January, schemes have recovered to record levels of surplus. However, the double whammy of ASB proposals and the Regulator's proposed mortality assumptions through the future of final salary schemes into further doubt," said Hurd.

"Continued uncertainty over the future of final salary pensions means it is likely that company sponsors will increasingly look towards the various forms of settling or managing their pension liabilities, especially as the cost of doing so is falling," he added.

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