BusinessCompany NewsInflation threatens pension schemes recovery

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
schemes.

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
said.

Further reading:

Employee benefits: pensions – ready for revival

Read
The Independet story

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