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Volatility hits pensions deficits

The final salary pensions accounting deficit of the UK's FTSE 350 companies stood at £41bn at the end of April, according to the Aon Hewitt 350 index. Measured on an accounting basis, UK schemes have moved much closer to fully-funded status compared with April 2010, when the collective deficit stood at £66bn.

However many pension schemes are failing to adjust their risk management strategies to cope with market volatility, resulting in significant swings in deficits. "Successfully managing market volatility is a critical factor for pension schemes as they seek to de-risk their assets relative to liabilities," said Marcus Hurd, of Aon Hewitt.