Britain’s leading blue-chip retirement schemes could be faced with a £15 billion funding shortfall as a direct result of the rout in share markets, according to a leading pensions expert. Rashpal Bhabra, head of corporate consulting for Watson Wyatt, a pensions consultant, told The Times that the assets of FTSE 100 final-salary pension schemes would have fallen by about £17 billion as equity markets dived yesterday. He said that huge drops in the stock market over the past five days could be responsible for wiping about £50 billion off the value of pension scheme assets in only a week.
Watson Wyatt reckons that FTSE blue-chip final-salary schemes remain in surplus – about £30 billion before yesterday’s slide. However, if markets continue their nose dive, the pressure on their funding position can only get worse.
Mercer, a rival consultant, said that rising yields on bond investments would have offset some of the equity movements. However, it calculated that the turbulence would have pushed schemes from a £2 billion surplus at the end of last month into a deficit of about £3 billion.