The National Association of Pension Funds (NAPF) commented on the latest Pension Protection Fund (PPF) 7800 Index, which showed the highest deficit since records began in 2003.
The deficit of pension funds covered by the Index is estimated to have increased over the month to £312.1 billion at the end of May 2012, from a deficit of £216.8bn at the end of April (a 44% or £95.3bn increase).
Joanne Segars, NAPF Chief Executive, said:
“This is a big leap further into the red for private sector final salary pension funds, and it reflects the immense pressure they are under. Cash-strapped businesses that are already struggling to keep these pensions going will have to find more assets to fill in the deficits.
“Quantitative easing and international investors seeking a safe harbour from the Euro storm have contributed to a sharp drop in gilt yields. That gilt fall has fuelled this record deficit, which is more a reflection of accounting rules on pensions rather than any structural weakness.
“Pension fund assets are actually higher than 12 months ago, but liabilities have risen disproportionately. This is a volatile monthly index and it is important to remember that pension funds work over a long timeframe that helps absorb the effects of market swings.”
Notes for 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]