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Special Report

ESG: The metrics jigsaw

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UK defined benefit pensions pull back deficits

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  • UK defined benefit pensions pull back deficits

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UK - UK corporate pension schemes last year gained approximately 10.6% of the losses suffered during 2008 as figures presented by the Pension Protection Fund suggest defined benefit funds amassed £827.7bn (€922.5bn) in assets by the end of 2009.

 Details of the PPF's 7800 Index - which monitors the performance of 7,400 funded corporate DB plans - state the aggregated funding position of schemes improved from a deficit of £190.6bn at the end of December 2008 to £32.6bn by the end of last year.

The actual comparison of deficit levels is a little more complicated than that as the PPF adjusted calculations in both March and October 2009 to reflect the new discount rates and assumptions for longevity used by pension funds, and this reduced liabilities by 7.6% (£71.2bn) by 31 October 2009.

That said, it does reflect some degree of gain for UK pension funds as they tapped into gains from both equity markets and bond yields. The FTSE All-Share index gained 25% over 12 months while 15-year gilts rose 71bp.

This in turn meant liabilities decreased by 4.1% and stronger equity prices increased assets by 11.7% last year, alongside the altered actuarial assumptions.

The number of schemes in deficit reduced to 5,364 (72% of schemes tracked) and the aggregated deficits were worth £90.7bn while the total of schemes in surplus rose to 2,009 and £58.1bn in assets.

The aggregated liabilities of the 7,800 index pension funds amounted to £905.2bn by the end of 2009 compared with £955.7bn in November 2009.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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