02 February 2007
The pension fund deficits of companies in the FTSE 100 share
index have fallen by nearly two thirds during the past four years,
a study has found.
Actuarial firm Watson Wyatt calculates that their collective
deficit has fallen from £90bn in March 2003 to £32bn
this month.
The combined deficits of final salary schemes dropped by
£14bn in December and £8bn in January.
The two main reasons were improved bond yields and rising share
prices.
"Most of the fall in deficits was due to increases in bond
yields, which rose by 0.15% in January and now stand at their
highest level since March 2005," said Stephen Yeo, senior
consultant of Watson Wyatt.
"Another positive influence has been the strong performance of
shares, where around 60% of company pension scheme assets are
invested.
"Share markets remain close to the highest level they have
reached since the current accounting standard was introduced in
2002," he added.
