UK- The UK’s occupational pensions need to raise a further £100bn (e162bn) if they are to provide members with the same level of security as those in the life assurance market according to the rating agency Standard & Poor’s.

Speaking at a conference on UK occupational pensions, Andrew Campbell-Hart, managing director of S&P’s financial services rating, said there is a “credit gulf” between the two sectors.

“The UK’s combined occupational pension funds maintain a minimum level of free capital. This compares with the UK’s regulated financial institutions which boast a market-wide capitalisation of about £78bn,” he said.

A figure of £100bn would bring occupational pensions in line with a comparative BBB level of security. But he added that, in an environment where many DB schemes are closing due to high costs, introducing such capital requirements would make most funds prohibitively expensive to run.

His comments come a day after a Mercer Human Resource Consulting survey of 59 company accounts showed almost two thirds were showing a deficit. In more than a third of cases, the deficits were more than 10% of liabilities.

Campbell-Hart says the market is faced with a conundrum. “Either it must face the fact that occupational pension funds offer a less secure but inherently cheaper option than their life assurance competitors, or it must find a halfway house between cost and security by making modifications to the existing system.”