UK Pensions On Life Support

Many British pensions are still “on life support” as their combined deficit grows to £419.7 billion. The Pension Protection Fund‘s 7800 Index of 5,945 pension funds has a combined deficit that has actually shrunk slightly, from £459.4 billion at the end of August. But experts are still worried.

The head of UK Strategic Clients at BlackRock, Andy Tunningley, said:  “UK pension funds remain in urgent need of life support. In September, a faint pulse was found… We would caution clients against any changes in portfolio allocation due to these developments.”

Speaking to Pensions World, he also said, ” It remains the responsibility of schemes and their sponsors to eliminate deficits, rather than hoping for a regulatory silver bullet.  We maintain our long-held position that most pension funds should be hedging more interest rate and inflation than their current levels, given our expectation that yields will be low for the foreseeable future.  Though we anticipate some additional fiscal stimulus from the Chancellor in the forthcoming Autumn statement, opening the possibility of additional gilt supply, we do not expect this to significantly impact yields.”