Deficits in UK private companies’ pension plans soared to a record last year as rising liabilities outweighed investment returns, a report by advisory company Pension Capital Strategies Ltd (PCS) showed.
The total deficit for defined-benefit private-sector plans rose more than fivefold to £212 billion (US$342 billion) from £37 billion in 2008. The £175 billion increase was the biggest ever, the report said. Asset values rose more slowly, increasing to £919 billion from £809 billion a year earlier.
“Despite strong investment returns in equities and elsewhere, pension deficits have risen sharply as liabilities have increased by even more than the investments,” Charles Cowling, managing director of PCS, said in an e-mailed statement on Dec. 31. “Reductions in AA bond yields [used to value pension liabilities] and increased inflation expectations have resulted in significant increases to pension liabilities.”
Pensions at companies in the UK’s benchmark FTSE 100 index slumped to a deficit of £72 billion from a surplus of £12 billion in 2008, the survey showed. Last year was “the worst calendar year performance on record” for UK pensions, Cowling said.
PCS is a unit of Jardine Lloyd Thompson Group Plc, the UK’s biggest publicly traded insurance broker.
Meanwhile, UK consumers are more aware of their personal finances now than before the banking crisis, Deloitte LLP said, citing a survey conducted for the company by YouGov Plc.
Slightly more than two-thirds of those surveyed said they were more knowledgeable about their finances than two years ago and 49 percent said they were paying off more debt. Only 38 percent said they were saving more than before the recession, and 56 percent said they weren’t, the findings showed.
Though individuals are doing more to understand and control their finances, the findings show “fewer consumers than expected initiating positive change with regards to their financial plans,” Ian Foottit, financial services partner at Deloitte said in a release on the company’s Web site.
Sixty percent of those questioned also said they were more concerned about the safety of their bank and over half said they would consider non-traditional banking providers.
YouGov surveyed 2,000 UK adults online from Sept. 18 to Sept. 21. The figures are weighted and representative of all adults in the country, Deloitte said.
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