Inflation threatens pension schemes recovery
Inflation at a 10-year high threatens the recovery of private sector final-salary pension schemes
Actuarial adviser Aon
Consulting warned today expectations of inflation, soaring to a 10-year
high, seriously threatened a recovery by private sector final salary pension
Aon said the 200 biggest final-salary pension schemes in the UK, excluding
public sector funds, were £6bn in surplus by the end of May – a 20% improvement
on last month and a major turnaround since the beginning of the year, The
Independent newspaper reports.
But higher inflation could undermine the improvement in scheme funding as
expectations of inflation, based on 15-year interest rates in the gilts and
index-linked bond markets, are now running at 3.75%.
‘The prospect of higher inflation is alarming and will be of concern to both
companies and pension scheme members,’ Marcus Hurd, a senior Aon consultant