The assets of all UK private sector pension schemes increased by £109bn to £1,135 at the end of June 2013, while liabilities also increased by £36bn to £1,213 over the same period last year.

According to JLT Employee Benefits' latest monthly index, the pension scheme assets of FTSE 100 companies increased from £437bn in June last year to £477bn this year, while the liabilities increased by £26bn to £517bn.

The index, which shows the funding position of all UK private sector defined benefit (DB) pension schemes under the IAS19 accounting standard, also revealed that the assets of FTSE 350 schemes increased by £35bn to £538bn and the liabilities increased from £565bn last year to £581bn in June this year.

JLT Employee Benefits director Charles Cowling said: "June may have seen the beginning of the end of the US Federal Reserve's $85bn a month monetary experiment; this triggered a global asset sell off and a sharp increase in bond yields.

"On the whole, this has provided good news for pension scheme balance sheets with UK corporate bond yield increases more than offsetting the impact of asset price falls.

"But then there has just been the sharp downward revision to US Q1 GDP growth; this prompted speculation that the Fed would hold back from tapering their quantitative easing programme and led to a slight rally in bonds."

Cowling said that there is uncertainty around the US monetary stimulus being removed and that market volatility is likely to be increased "for some months yet", because of "a new face" in the Bank of England's governor seat.

"In such volatile markets it is important for pension schemes to consider and monitor trigger points for de-risking strategies so that market opportunities are not missed. In particular, there may be pricing and funding opportunities to settle and insure pension scheme liabilities."

First published 02.07.2013

monique_simpson@wilmington.co.uk