Pension schemes face ₤70bn shortfall

UK defined benefit pension schemes now collectively face a £70bn billion funding shortfall – more than triple the £20bn deficit of the start of the year, PricewaterhouseCoopers (PwC) estimates.

Company defined benefit schemes, including final salary pensions, plunged another £7bn into deficit as a result of a 6% fall in equity markets this week as traders responded to the collapse of US investment bank Lehman Brothers, The Press Association reports.

‘UK pension schemes are facing the triple pressure of declining equity values, lower income from dividends, and increasingly cash-strapped employers,’ Marc Hommel, PwC pensions partner, said.

The current pressure on defined benefit schemes is expected to accelerate the rate of closure to new members or future accruals.

Further reading:

KPMG warns of showdown with pension trustees