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The Pension
Protection Fund (PPF) has revealed that the aggregate funding position
of almost 7,800 defined benefit (DB) schemes has spiralled into
a deficit of £97.3bn at the end of October 2008.
The deficit has worsened by £17bn, from £80.3bn in September
2008, and represents a huge loss since October 2007, when there
was a surplus of £84.1bn. The number of pension schemes in
surplus has also fallen by more than 50 per cent over the last year,
from 3,121 in October 2007 to 1,273 in October 2008.
In October 2008, the PPF has placed the total deficit of schemes
in deficit at £122.1bn from £113.5bn at the end of September
2008. Over the year, this has fallen from £36.9bn since October
2007.
The PPF has put the falls into context by noting the 6.8 per cent
decrease in assets in October 2008 due to falling UK and global
equities. The drop in asset value was also attributed to falling
UK and global equity markets, as in October the FTSE All Share Index
slipped by 12.1 per cent.
Ben Shaw, development director of the Occupational Pensions Trust
(OPT) commented on the results from the PPF: “I am not entirely
surprised given that the vast majority of the UK’s schemes
are roughly evenly split in asset allocation between equities and
fixed interests.
“If schemes had followed a multi-asset investment strategy
by investing in a wide variety of non-positively correlated assets,
they would not have seen such sharp falls this year.”
Shaw reiterated his views
on trustees not being brave enough, which he made clear to Pensions
Age earlier in the year. “Too many trustees are not brave
enough to do anything but follow the crowd – at least with
this herd mentality, trustees believe that they cannot be singled
out for having done something wrong. But is that really the way
to approach best serving members’ interest?” he asked.
Meanwhile, the PPF has also opened its doors to over a thousand
more pensioners, by taking five more schemes into its organisation
in October 2008.
Holmes Group Retirement Benefits Scheme, the McCowans Limited 1989
Pension Scheme, North Eastern farmers Limited Pension Plan, Radix
Employees Defined Contribution Plan and Tomkinsons Carpets Limited
Pension Scheme are now part of the 66 pension schemes which are
in the PPF.
Between 2 October and 1 November 2008, the PPF said that it paid
out more than £3.2million in compensation, with the average
yearly compensation hitting £4,700 per person.
Details of the schemes that have transferred into the PPF can be
found here.
- Pensions Age
November 2008
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