FTSE 350 pension scheme deficits remained relatively static during the last month despite a rising equity market, according to Mercer.
Data from the consultant revealed the combined deficit fell by just £2bn between the end of September and the end of October from £65bn to £63bn.
This was despite an £8bn increase in assets values during the period, from £631bn to £639bn.
Mercer said the asset increase was offset by a rise in market implied inflation which increased liabilities. It found liability values were £702bn at the end of October – a rise of £6bn compared to £696bn at the end of the previous month.
Mercer Financial Strategy Group principal Le Roy van Zyl said: “October provided some respite in terms of improving markets. However, it is difficult to ignore the fact that there remain a number of scenarios that could lead to further headwinds for pension funds. For example, the economic situation in China and the emerging markets is still far from clear.
“Against this backdrop, companies and pension fund trustees have to have an ongoing debate on how they can best work together to ensure prudent financial management without taking short-termist actions they are likely to regret in future. A key tool to achieve this is to set up a Joint Working Group – something a number of our clients are finding very valuable.”
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