The National Association of Pension Funds (NAPF) commented on the latest Pension Protection Fund (PPF) 7800 Index.
The deficit of pension funds covered by the Index is estimated to have increased over the month to £255.2 billion at the end of December 2011, from a deficit of £222.1 billion at the end of November.
Joanne Segars, NAPF Chief Executive, said:
“This Index shows that pension funds are falling even further into the red, and businesses will be under more pressure to fill in the deficits. It’s a stark and painful reflection of the burdens on final salary pensions in the private sector.
“While the Index shows that there has been a modest rise in pension fund assets, this has been trumped by a leap in liabilities, which have increased by a third (32.5%) compared with a year ago.
“Low interest rates, a faltering economy and the side-effects of quantitative easing are all to blame for the rise in liabilities.
“These figures do not reflect the long-term health of pension funds, which work over a long timeframe and are able to manage the effects of market volatility. It is important to stress that the underlying pension liabilities – the amounts they have to pay out - have not changed much over the past 12 months. It is the way they are measured that has seen liabilities soar.
“The Pensions Regulator needs to help pension funds deal with quantitative easing by giving them some breathing space. Recovery periods, smoothing valuation results and postponing valuation dates are all options that should be considered.”
Notes to editors:
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]