The aggregate deficit of UK defined benefit (DB) schemes surged to £135.9 billion in March, up from £124.6 billion at the end of February, latest PPF data reveals.
At the start of 2020 the aggregate deficit figure stood at just £10.9 billion.
Aggregate asset values plummeted from £1,720.9 billion in February to £1,680.5 billion in March.
A fall in the value of liabilities over the same period, from £1,845.5 billion to £1,816.4 billion, helped mitigate the impact.
Tom Selby, senior analyst at AJ Bell, comments: “As the coronavirus shutdown has forced economies around the world to hibernate and central banks to launch fresh stimulus packages, defined benefit schemes were always likely to be caught in the firing line.
“Today’s figures demonstrate yet another grim reality of the current crisis, with the total deficit of schemes in the UK rising by over £10 billion in March. Since the start of the year, the aggregate deficit figure has surged by over £100 billion.
“The combined deficit of DB schemes in deficit is now a staggering £254.1 billion, up from £244.8 billion at the end of February.
“While such figures may understandably give the members of DB schemes the jitters, it’s worth remembering the most important thing in most cases is not the value of any deficit today but the ability of an employer to survive long enough to pay your pension both now and in the future.
“Furthermore, DB schemes benefit from the safety net of the Pension Protection Fund (PPF), so even if the scheme sponsor faces liquidation you should still get a significant chunk of the pension you were promised.
“From a company perspective, bigger DB deficits are a problem because they could threaten to divert cash that would otherwise be used to fund growth plans and reward shareholders.”
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