The UK's defined benefit (DB) private pension schemes saw their accumulated deficit grow nearly two-fold in the last year, figures released by JLT Pension Capital Strategies (PCS) revealed.

Though its monthly index showed a nearly static funding position between March and April, over the period of a year the total deficit grew from £77bn to £172bn.

Charles Cowling, managing director of JLT Pension Capital Strategies said difficulties became visible now that actuarial valuation is due.  

"In truth, the accounting numbers play down how bad the position really is," he said. "We have now had the promised statement from the Pensions Regulator on how it expects trustees to react to current market conditions when negotiating funding agreements or recovery plans on the back of actuarial valuations – and it provides little or no respite for companies with large legacy DB pension schemes.

"With no sign that quantitative easing (QE) is about to be reduced and the OECD even encouraging more QE, the pain this is causing pension schemes (by forcing up liability values) looks set to continue for some time yet."

Total assets for the private sector schemes were £1,007bn, while liabilities were recorded at £1,179bn. This compares to the figures released last month which stood at £1,018bn and £1,174bn, respectively.

First published 01.05.2012

azeevalkink@wilmington.co.uk