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UK’s FSA seeks to ease own pension deficit

UK – Financial watchdog the Financial Services Authority made £6.7m (€10m) in contributions in the last financial year to ease a deficit of almost £80m in its own pension scheme.

In its annual report, the FSA revealed a deficit of £79.5m under the FRS17 accounting standard, from £80.6m the year before.

It said: “Despite the large deficit, the FSA believes that it remains able to meet its liabilities as they fall due. These liabilities will not crystallise for many years, and the plans for funding the pension deficit take account of both this fact and the FSA’s statutory fee raising powers.”

The closed scheme’s investment strategy – which was 80% in equities – was reviewed in 2003/4. “Following the review, the trustees elected to move gradually to lower risk assets in the medium term,” the report said.

Although this lowered volatility, it also lowered the expected return to around 6%.

The FSA said it would “endeavour to ensure” that the scheme’s liabilities do not increase in any year “by more than we can afford”.

The report stated that the 0.1% decrease in the corporate bond discount rate increased liabilities by around £6m.

It said it was “conscious of the need to manage our pensions liabilities actively”. A spokesman did not return a call seeking comment.

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