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15 Apr 2013

UK Pension Deficit Rises In March

According to the latest figures released by the Pension Protection Fund (PPF), the deficit of final-salary pension schemes in the private sector increased in March and reached £237 billion, compared to £201 billion in the previous month.

The new data suggests that British businesses that provide such schemes might be struggling to maintain these pensions, the PPF said in a press release. The deficit has also increased in comparison to March 2012, when it reached £204 billion. However, it is still way below the peak of £317 billion recorded in May 2012. Overall, 5,080 schemes of the 6,316 were in the red, while the remaining 1,236 were in surplus. Meanwhile, the report also found that the funding ratio fell from 84.6% to 82.6%.

Melanie Duffield, head of research at the National Association of Pension Funds (NAPF), commented that the rise in deficit could partly be attributed to the economic uncertainty and the potential next wave in quantitative easing that has kept gilt yields low, the BBC informed.

Many pension funds are set to make their valuations this year and the news of the rising deficit may come as a challenge. Duffield explained that the Pensions Regulator is due to make its annual funding statement in a few weeks´ time and this should help those pension funds. It is essential that funds take advantage of all flexibilities provided by the regulatory system, so that they could deal with the challenges in the best possible way, she added.

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