UK Corporate Pension Deficits Increase £89bn Monthly

Following the Brexit vote, corporations find difficulty in minimising the £89bn pensions deficit that reappears monthly.

The Pension Protection fund showed that private sector pensions shortfalls have increased to £383.6bn after the vote to leave Britain, a significant rise from the previous £294bn from June, a month before the referendum.

UK pension scheme funding has never been in a more perilous state,” said Andy Tunningley, head of UK strategic clients at BlackRock.

“A significant slowdown in UK growth and material likelihood of a recession next year could threaten the financial outlook of pension scheme sponsors. We have halved our UK real growth forecasts to 1 per cent per annum for the next five years.”

About 84 per cent of pension funds are in deficit, according to the PPF, the lifeboat created 12 years ago to safeguard pensioners’ rights. The remaining 16 per cent have a total surplus of just £37.4bn, a fraction of the total deficit.

The PPF is currently eyeing the takeover to BHS retirement fund and the Tata Steel Pension Scheme that had failed to deliver and address its deficit troubles reaching up to £1bn.

With Gilt yields at record lows, some investors had flocked out while others had rushed to purchase the gilts before the markets recover.