UK - The deficit at Hermes Pension Management's own £50m in-house scheme widened to £16.6m (€24.4m) last year from £14.7m, company accounts show.
A change in the discount rate (down to 4.75% from 5.3%) caused by declining bond yields saw the liability surge by £7.3m at the UK pension fund manager, owned by the BT Pension Scheme.
A 27% rise in assets to £50.8m could not cover the scheme's actuarial value of its liabilities, which shot up 23% to £67.4m from £54.6m the year before.
According the figures, expected returns on the fund's scheme's assets were down to -3.2% (from -2.7% in 2004).
The net return was -0.3%. A rise in current service costs and a fall in contributions further enhanced the deficit. Two hundred and sixty eight of Hermes' around 300 employees are covered by the scheme.
The next pension fund valuation is due as of December 31 2006. Actuarial services are provided by Watson Wyatt.
Hermes doubled pre-tax profits to £5.6m mainly due to strong inflows. In 2005 mandates totalling £3.3bn were acquired bringing total funds under management to £65.5bn.
Operating profit was £3.1m, up from £2m. Administrative expenses climbed to £73.8m from £57.6m the year before.
The figures also show that Hermes paid out £75,000 in fees to the chairman of the BT Pension Scheme, Sir Tim Chessells, on behalf of the scheme.