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

02 October 2017

Pension schemes looking more buoyant

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

At 30 September 2017

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£664bn

£711bn

(£47bn)

93%

FTSE 350 Companies

£749bn

£808bn

(£59bn)

93%

All UK Private Sector Pension Schemes

£1,558bn

£1,737bn

(£179bn)

90%

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

At 30 September 2016

Assets

Liabilities

Surplus / (Deficit)

Funding Level

FTSE 100 Companies

£651bn

£755bn

(£104bn)

86%

FTSE 350 Companies

£738bn

£861bn

(£123bn)

86%

All UK Private Sector Pension Schemes

£1,538bn

£1,852bn

(£314bn)

83%

 

Charles Cowling, Director, JLT Employee Benefits, comments: 

“Despite a political backdrop which continues to be problematic, with concerns over North Korea and Brexit, amongst many; despite concerns over rising inflation; despite many market worries and woes; and despite Mark Carney saying this week that the Bank of England cannot be expected to solve every economic problem in the UK, the funding position of DB pension schemes is showing signs of positive improvement, after a traumatic few years.

The total deficit in the pension schemes of FTSE100 companies is back below for £50billion and showing signs of heading even lower. 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.

“Still, some challenges remain. 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’.

“But, in another positive move for UK companies with DB pension schemes, the IASB met last week and decided to ‘perform further work to assess whether it can establish a more principles-based approach in IFRIC 14 for an entity to assess the availability of a refund of a surplus’. This means that the feared changes which could have seen tens of billions of pounds added to the pension liabilities showing in the balance sheets of UK companies has been postponed - 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.”   

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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 click 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 3047 2529| 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 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