Britain’s generous defined benefit pensions have plumbed further depths during August, reaching another record-breaking deficit of £459.4bn as the scramble for bond assets and the interest rate cut sent their liabilities soaring.
The remaining 6,000 defined benefit schemes can now meet just 76.1pc of their obligations to pensioners, according to the sums used by the Pension Protection Fund, which rescues ailing schemes. This is the worst funding ratio since the PPF started publishing figures in 2006.
A rush for safe-haven bonds around the world has sent the yields on sovereign bonds through the floor – meaning a fall in the regular income that pension funds use to pay their retirees their defined benefits, sometimes known as final salary pensions. The Bank of England’s rate cut to 0.25pc has worsened the shortfall.