Rising FRS17 Liabilities Negate Equity Rises for Pensions

The recovery in UK equity prices over the past year has been largely cancelled out by increases in pension scheme liabilities, according to consultants, Watson Wyatt. Despite positive news from the stock market in recent months, the overall FRS17 deficit for UK pension funds is little changed from a year ago. The FRS17 pension deficit for FTSE100 companies is broadly unchanged from 12 months ago (£60 billion) while the deficit for all UK pension schemes could be as much as double this figure, said the organisation. ‘While a rising stock market has been positive, the liabilities of pension schemes have increased because of higher inflation expectations and lower corporate bond yields,’ said Robert Hails, a partner at Watson Wyatt. ‘The stock market recovery was clearly welcome but rising liabilities mean it has done little to eat into these accounting deficits.’

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