Mixed views on pensions' health

The looming recession could have serious implications for schemes

Two surveys offer a mixed picture of the health of the UK's largest company pension schemes in 2008.

Business advice group Deloitte estimates that the pension schemes of the 100 biggest companies are in deficit by £130bn.

But a separate study by Aon Consulting says the top 200 companies' schemes are in the black, although they use different accounting techniques.

Both groups suggest that pension funds remain volatile in the current climate.

Recession issues

Deloitte says that the credit crunch has wiped £65bn off the value of assets in the pension schemes of FTSE 100 companies.

Typical investments by these schemes in shares and property are likely to continue to struggle as the UK enters a recession, Deloitte says.

Aon says that, although assets have been hit over the year, funds technically benefited from rising yields on corporate bonds and were £3bn in surplus at the end of the year.

Aon took this into account in their numbers, whereas Deloitte disregarded it as an "illusion", prompting the contrasting conclusions.

Marcus Hurd from Aon Consulting accepts that the surplus could give a false impression of how tough the year had been for investments, describing the surplus as a "black comedy".

He adds that companies now face a dilemma of whether to disclose the surpluses in full on their end of year accounts, or whether to hold some back citing exceptional circumstances that caused the surplus.

Deloitte says that returns for different schemes varied depending on their investment strategy.

But, across the board, trustees were likely to ask employers for contributions they could "reasonably afford" to help plug a growing deficit.