Retirement news
Pensions 'clawing back the deficit'
1 May, 2007
The total deficit for the 200 largest pension schemes has now fallen to just £14bn, the lowest monthly level since records began
In addition, 30 per cent of these pension schemes are now in surplus - although deficit volatility is still high and weekly changes of as much as £5bn in deficit levels are common.
According to research by Aon Consulting, the removal of pension schemes’ ability to reclaim Advanced Corporation Tax (ACT) on dividends since 1997 has cost the 200 largest schemes £20bn – an amount that would not exist if ACT relief had been maintained. If the abolishment never happened, these 200 affected schemes would be in surplus by a total of £6bn and 40 per cent of schemes would be in surplus.
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Marcus Hurd, senior consultant and actuary at Aon Consulting said: “One third of pension schemes are now in surplus, which is to be welcomed, but volatility still remains and the pensions crisis is now yet over.
“The impact of the volatility of pension scheme valuations on employers’ balance sheets continues to be a major cause for concern. Pension schemes will continue to rue the day that Act relief was removed.”
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