Defined Benefit Schemes’ Deficits Hit £80 Billion

13 December 2011

Defined Benefit Schemes' Deficits Hit £80 Billion

This year has seen DB schemes suffer from the double whammy of falling bond yields and poor stock market performance. According to news agency Reuters, this led to a 33% rise in DB scheme deficits to the end of November 2011.

"This rise in deficits equates to an £80 Billion shortfall for UK employers. The ongoing struggle of running DB schemes for scheme sponsors and trustees is not getting any easier" says Paul Doble, Director, Creative Benefits.

Just in the month of October 2011 deficits were estimated to have risen by £20 billion. With relatively flat stock markets, the primary driver for this jump has been the continuing fall in gilt yields. With the Euro zone debt crisis far from over, the knock on effect to Corporate Bond yields may continue for some time to come.

"Trustees may need to reconsider the general trend to 'de-risk' their scheme in order to improve the forecast returns and so in turn improve the funding position".

Paul Doble, Director, Creative benefits

Creative Benefits provide full Consultancy and support services for Defined Benefit pensions.