Pension fund deficit eases in May

The deficit of UK pension funds eased again slightly in May, according to the Pension Protection Fund (PPF).

The shortfall in the UK's 7,400 defined benefit schemes, including final salary pensions, fell from £188.5bn at the end of April to £179.3bn at the end of May.

But the funding position was much worse than a year earlier when there was a surplus of £51bn.

Some 87% of defined benefit schemes sampled by the PPF were in deficit in May, the report found.

Rising stock markets and higher gilt yields were behind the improved position, the PPF said, bucking the trend of the last year.

There have been fears that more companies will close their pension schemes to new members and alter terms for existing members during the recession.

"This is the first time in a year that the funding position has improved for two months on the trot," said Rash Bhabra, at actuaries Watson Wyatt.

"Employers hope that investment returns will help get their schemes back in the black but there is no guarantee they will and, even in benign scenarios, pension deficits will put considerable pressure on company finances for years to come," he added.

RELATED INTERNET LINKS
Pension Protection Fund
The BBC is not responsible for the content of external internet sites