According to Mercer’s Pensions Risk Survey data, the estimated aggregate IAS19 deficit for FTSE 350 defined benefit (DB) schemes stood at £97bn, which equates to a funding ratio of 85%, at 31 December 2013. The deficits increased despite the fact that UK equities returned 19% over the year and there were continued "significant" cash contributions from employers, Mercer said.
Mercer said that the increase in deficits is predominantly driven by the increase in long-term inflation expectations over the year. "Over 2013 as a whole it has been interesting to see how the three key elements which drive the deficit calculation have independently influenced the deficit," Mercer head of DB risk in the UK Ali Tayyebi said.
