The shortfall of all UK private defined benefit (DB) schemes has decreased by £25bn in one month, to £174bn at the end of September, according to data from JLT Employee Benefits.
At the end of August, the total deficit stood at £199bn, while at the end of September last year it reached £314bn.
The total deficit of FTSE 100 companies DB schemes is now £45bn, £10bn less than in the previous month.
Charles Cowling, director at JLT Employee Benefits, said that this number in now back below £50bn “showing signs of heading even lower”.
Mr Cowling said: “This good news comes on the back of equity markets holding up well, inflation numbers that are as bad as some expected, longevity improvements slowing down and best of all (for pension schemes at least) a sign that at last interest rates may be on the rise again, after nearly 10 years of painful reductions.”
Regarding FTSE 350 companies, the deficit has decreased £11bn, standing now at £57bn.
Despite the decrease in deficits, some challenges remain, Mr Cowling added.
He said: “Pension schemes which are carrying out actuarial valuations in 2017 are likely to show bigger deficits than in 2014, and trustees will therefore be knocking on the finance director’s door asking ‘more please’.”
This is the case of the Universities Superannuation Scheme (USS), which is currently conducting its triennial valuation. Latest figures show a £12.6bn deficit in the DB scheme.
A recent report from Barnett Waddingham also found out that pension scheme deficits have risen to 70 per cent as a proportion of UK plc profits. This value is even higher than in the immediate aftermath of the financial crisis.
maria.espadinha@ft.com
