JLT's monthly fund index update for the month of July 2017

01 August 2017

Pension scheme deficits decrease

JLT Employee Benefits (JLT) has updated its monthly index, showing the funding position of all UK private sector defined benefit (DB) pension schemes under the standard accounting measure (IAS19) used in company reports and accounts.

As at 31 July 2017, JLT estimates the total DB pension scheme funding position as follows:

At 31 July 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£670bn

£719bn

(£49bn)

93%

FTSE 350 Companies

£756bn

£817bn

(£61bn)

93%

All UK Private Sector Pension Schemes

£1,570bn

£1,753bn

(£183bn)

90%

For comparison, the corresponding figures as at 31 July 2016 are as follows:

At 31 July 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£632bn

£713bn

(£81bn)

89%

FTSE 350 Companies

£718bn

£813bn

(£95bn)

88%

All UK Private Sector Pension Schemes

£1,487bn

£1,745bn

(£258bn)

85%

Charles Cowling, Director, JLT Employee Benefits, comments: 

“Markets continue to hold up despite a challenging political backdrop. As a result IAS19 pension deficits (the deficit that is recorded in a company’s accounts) have continued to drift lower.

“However these figures hide some pretty major problems. In recent days we have seen both Barclays and the massive USS pension scheme for university staff announce significantly increased funding deficits in their DB schemes. And it is the trustees’ funding deficit that drives contribution demands on companies. Those companies and pension schemes currently carrying out their 3-yearly actuarial valuation are likely to see significant increases in funding deficits and hence considerable demands for cash contributions.

“Additionally new accounting changes are currently being considered by the International Accounting Standards Board (IASB). This may appear a minor technical amendment to a part of the IAS19 standard (known as IFRIC 14) but it could result in many companies being forced to recognise a substantially greater pension liability on their balance sheets than at present. The IASB is currently carrying out some work to determine the impact of its proposed changes, but potentially it could add tens of billions of pounds of additional liabilities on to the balance sheets of UK companies.”

- ENDS -

In a recently published whitepaper, JLT Employee Benefits has offered a number of recommendations to achieve what we believe would help to address those DB pension sustainability issues. If you’d like to request our whitepaper – please find a link here (JLT: How do we get out of this Pensions Black Hole?).

Notes to Editor

Enquiries:

JLT Employee Benefits

Corinne Gladstone, PR Manager| T: +44 (0)20 7895 7705| E: corinne_gladstone@jltgroup.com

Smithfield Consultants:

Julia Cooke | T: +44 (0)20 7903 0631| E: jcooke@smithfieldgroup.com 

About JLT Employee Benefits

JLT Employee Benefits is one of the UK's leading employee benefit providers offering a wide range of benefit and pension services, including administration, actuarial and pension consultancy, investment, Self Invested Personal Pensions (SIPPs) and Small Self Administered Schemes (SSASs) administration, flexible benefits, healthcare, benefit communication and financial education.

JLT Employee Benefits employs over 2,200 professionals throughout the UK and in 2013 had revenues of £172m in UK & Ireland.

Pensions and employee benefits companies within the JLT Employee Benefits group of companies include: JLT Benefit Solutions Ltd, Profund Solutions Limited, JLT Wealth Management Limited, JLT Investment Management Limited and Independent Trustee Services Limited. JLT Employee Benefits is part of Jardine Lloyd Thompson Group plc.

www.jltemployeebenefits.com

About Jardine Lloyd Thompson Group plc

Jardine Lloyd Thompson is one of the world's largest providers of insurance and employee benefits related advice, brokerage and associated services. JLT's client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.

JLT is quoted on the London Stock Exchange and owns offices in 41 territories with some 10,600 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.

www.jlt.com


contact Charles Cowling
Director charles_cowling@jltgroup.com 0161 242 5388