The aggregate deficit of UK private sector defined benefit (DB) schemes increased by more than £200bn (€235bn) in 2016, according to JLT Employee Benefits.
The total shortfall was £434bn, the company estimated, compared with £233bn a year earlier.
It is the highest year-end deficit JLT has recorded, said director Charles Cowling.
This figure peaked at a record £503bn at the end of September as deficits soared in the wake of the UK’s vote to leave the European Union.
At the end of 2016, total liabilities reached £1.88trn, while assets hit £1.45trn.
Cowling warned that more pension funds would become “a serious threat” to their sponsors’ balance sheets “and, in some cases, the [companies’] ability to pay dividends”.
He added: “The tools now exist for an effective de-risking of pension assets and liabilities that, while not promising a silver bullet, do mean pension problems can be managed and solved in time.
“Maybe 2017 will be the year in which formal end-game de-risking strategies are at last embraced by the majority of pension schemes.”
Meanwhile, Mercer’s data on FTSE 350 company pension schemes reported that their combined deficit increased threefold during 2016, from £39bn to £137bn.
Alan Baker, UK DB risk leader, said: “This continues to put real pressure on any risk-management plans and will require trustees and corporate sponsors to work closely together to establish the right framework to monitor and manage those risks.”
Last month, a committee of politicians published a wide-ranging report proposing DB sector reforms and calling for new powers for the Pensions Regulator (TPR), including a “nuclear deterrent” ability to fine companies for failing to manage pension deficits.
However, the headline-grabbing proposal is unlikely to be used even if it is included in a forthcoming government reform paper, according to Faith Dickson, a partner and pensions lawyer at Sackers.
“Giving TPR the power to levy punitive fines on employers to ensure they support struggling schemes might sound impressive, but it is unlikely these powers would be used in practice,” Dickson said.
“If they were, the most likely outcome is further delays while employers challenge the fines.”
In addition, Dickson warned that placing limits on the length of deficit-recovery plans could force some pension funds to adopt “an overly aggressive approach” to investment.
Dickson supported the Work and Pensions Committee’s proposal to increase the use of regulated apportionment arrangements, which have been used on rare occasions to secure benefits while removing some responsibilities from sponsoring employers, all without resorting to the Pension Protection Fund (PPF).
“We need to move away from thinking these changes are taking benefits away from members,” she said.
“In reality, they can make businesses sustainable and open the door to schemes delivering benefits to members over the long term, when they might otherwise only have PPF compensation.”
Elsewhere, the Pensions and Lifetime Savings Association (PLSA) has urged the government not to increase the state pension age any further.
Responding to a consultation about the future of the taxpayer-funded state pension, the PLSA said an increase above age 68 – which will be the national retirement age from 2046 – would place those with lower life expectancies at a disadvantage.
Graham Vidler, director of external affairs at the PLSA, said the state pension age should not be changed any more than currently planned.
He also argued that benefits should be linked to inflation.
“Proposals for a variable pension age, while attractive in tackling socio-economic differences, would sacrifice the simplicity and clarity of the current system,” he said.
“On balance, we support the current system of a single state pension age for all.”