FTSE 100 firms’ pension deficit soars, says LCP – BBC News

Image copyright Reuters Image caption Pension strategies are still under stres

The combined pension funds deficit for companies in the FTSE 100 has ensure huge increases in the past year, according to pensions expert LCP.

LCP, in its annual report on the pensions market, said that by the end of July, the deficit was an estimated 46 bn, as against 25 bn a year earlier.

And this month, the deficit has widened further to 63 bn, LCP told the BBC.

The position has deteriorated because of lower bond yields, with a sharp autumn after the UK’s vote to leave the EU.

But sterling’s autumn after the Brexit result has partly offset this impact, LCP said.

‘Ridden out Brexit’

Falling bond yields cause problems for pension funds, because they reduce the amount of income available from investments.

Bond yields have fallen even further this month, in the wake of the Bank of England’s decision to cut interest rates from 0.5% to 0.25% and step up its bond-buying programme in an effort to stimulate the UK economy.

Brexit’s impact on the economy Image caption FTSE 100 companies briefly had a blended pension surplus in February

Leave a Reply

Your email address will not be published. Required fields are marked *