UK - Aon Hewitt has warned UK pension funds to de-risk their assets or face another major upswing in their defined benefit (DB) pension deficits.

The pensions deficit of FTSE 350 corporate pension schemes fell from £66bn (€73.4bn) to £41bn in the year to April, according to the consultancy.

Commenting on data published today, principal Marcus Hurd pointed out that liabilities in fact remain broadly where they were a year ago.

He attributed the pension schemes' move toward fully funded positions to recent equity market performance.

Despite equity performance fluctuating by 25% over the past 12 months, and corporate bond yields ranging from 4.8% to 5.7%, pension schemes have failed to adjust their risk management strategies, he said. 

The result has been significant deficits swings over the past 12 months, with a deficit peak of more than £100bn in August.

"Some schemes were looking to de-risk a year ago when it made no sense at all," he said. "Others are now facing £40m deficits rather than £100m deficits, and they're still not de-risking."

He suggested governance and slow review processes within pension schemes were largely to blame for the failure to make timely de-risking decisions.

"The really smart schemes went down the automatically de-risking route, and you've seen them hitting their triggers and banking the gains. 

"All pensions schemes should be looking at it as an option. Every scheme should be looking at what it can do to capture the upside."