Actuaries at Buck Consultants calculate that UK pension deficits will increase by over £100 billion in 2013.
Despite rises in the stock and bond markets in which retirement schemes have invested their assets, deficits are expected to increase due to the large take-up of corporate bonds, which has driven down yields on high quality corporate debt.
This high risk taking has come in for criticism. Speaking to the Financial Times, John Ralfe, an independent pension consultant said: ‘too many companies continue to take massive bets in their pension funds which they would not dream of taking in their treasury department… Too many companies act as though a pension deficit can be plugged by holding equities and hoping for the best. ‘
Others predict only short-term harm, as predicted deficits will encourage employers to increase their pensions contributions.
Large UK employers, such as Lloyd’s of London, RBS and BAE Systems hold the largest pension liabilities at the end of last year according to JLT Pension Capital Strategies.