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

01 December 2017

All eyes on Brexit - Is this the calm before the storm?

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 30 November 2017, JLT estimates the total DB pension scheme funding position as follows:

At 30 November 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£673bn

£713bn

(£40bn)

94%

FTSE 350 Companies

£760bn

£811bn

(£51bn)

94%

All UK Private Sector Pension Schemes

£1,584bn

£1,745bn

(£161bn)

91%

For comparison, the corresponding figures as at 30 November 2016 are as follows:

At 30 November 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£626bn

£713bn

(£87bn)

88%

FTSE 350 Companies

£711bn

£812bn

(£101bn)

88%

All UK Private Sector Pension Schemes

£1,487bn

£1,745bn

(£258bn)

85%

Charles Cowling, Director, JLT Employee Benefits, comments:

“Despite the first rise in interest rates for more than 10 years, November has been a quiet month for markets and pension schemes. The rate rise was widely anticipated and, with inflation showing no further signs of increasing and a fairly neutral Budget, markets have remained calm. This is despite concerns over the poor economic outlook and Brexit.

 “After 10 years of painful reductions, rising interest rates will come as some relief for pension schemes as it will reduce the value attached to their liabilities. Further relief may also be coming as improvements in longevity continue to slow, which would likely reduce pension liabilities. Consequently, finance directors may see their year-end numbers looking more positive than expected earlier in the year.

“However, many challenges still remain. Pension schemes which are carrying out actuarial valuations in 2017 are likely to show much bigger deficits than at their last valuation in 2014. Finance directors will therefore be facing trustees asking for higher contributions.

“Moreover, for the few private sector schemes still left providing Defined Benefit (DB) pensions to employees, the 2017 actuarial valuations will be showing much higher ongoing pension costs than 2014. The pressure will again be on private sector employers to find alternatives to DB pensions.

“The public sector seems to live in a parallel world when it comes to assessing their DB pension costs. This has been amply illustrated this month by news around USS, the UK’s largest private sector pension scheme, as proposals to close it to new DB benefits and move university staff over to a DC pension prompted the University and College Union to send out ballot papers this week to all university staff calling for strike action in the New Year.

“But, for now, trustees and finance directors may wish to take advantage of these slightly calmer waters to explore opportunities to offload and settle pension liabilities.”

- ENDS -

In a whitepaper published earlier this year, 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:

Emily Cullen | T: +44 (0)20 3047 2530| E: ecullen@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 2015 had revenues of £167.4m 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 141 countries.

www.jlt.com


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