Eight out of 10 defined benefit pension schemes still face a shortfall despite an improvement in their funding position during November, figures showed today.
Around 79 per cent of defined benefit schemes, including final salary pensions, had a deficit at the end of the month, according to pensions safety net the Pension Protection Fund (PPF).
These schemes collectively faced a funding blackhole of £132.9 billion, although this was an improvement on the shortfall of £135.1 billion at the end of October.
Once pension schemes with a surplus were included in the figures, the nearly 7,400 defined benefit schemes that belong to the PPF were collectively £92.5 billion in the red, compared with a £97.6 billion deficit at the end of October.
Pension schemes benefited from a 2.2 per cent rise in the value of their assets during November, although some of this was offset by a 1.5 per cent increase in the value of their liabilities.
The funding position of schemes is considerably better than it was a year ago, when they faced a collective deficit of £123.9 billion.
But although pensions have enjoyed a 15.2 per cent increase in the value of their assets during the past year, much of the improvement is due to a new accounting regime, which was introduced last month.
The majority of companies have now closed their final salary pension schemes to new members in the face of the increased cost of offering the schemes.
There is also a growing trend for firms to close them to existing members as well, with people instead offered less generous defined contribution schemes under which the individual shoulders the risk of investment volatility and increased life expectancy, or hybrid schemes under which the risk is shared.Reuse content