The UK’s largest listed companies have seen deficits increase to nearly £190bn (€226bn) by the end of August, with the £50bn increase the largest ever recorded by Mercer.

According to the consultancy, companies within the FTSE 350 had overall pension liabilities of £926bn at the end of August, a £70bn increase over July, after what senior partner Ali Tayyebi described as a “sharp” fall in corporate bond yields in the intervening weeks.

“This [drop] also means our reference long-dated corporate bond yield has now fallen below 2% per annum for the first time, representing yet another milestone into uncharted territory,” he said.

Tayyebi’s colleague, Le Roy van Zyl, said the “seemingly relentless” increase in deficits was continuing and warned companies struggling with increased underfunding not to neglect pension schemes.

“Letting things drift can be just as dangerous as taking knee-jerk actions,” he said.

As a result of the increase, deficits stood at £189bn at the end of August.

The estimated increase in deficits across listed companies comes only a month after the Pension Protection Fund’s own estimates of deficits rose to their highest-ever level of £408bn.

In other news, UK retailer Marks & Spencer has confirmed the closure of its defined benefit (DB) fund after holding talks with staff.

From 2017, employees will no longer be able to accrue benefits in the existing DB fund.

They will instead be offered the opportunity to join the company’s defined contribution (DC) fund.

The company said the changes would not materially impact its balance sheet but predicted additional costs of £150m as a result of DB members shifting from active to deferred.

As a result of the change, the company said pensionable salary would no longer be capped at 1% but rather increase in line with the consumer prices index.