Pensions black hole disappears
Back in the black at last
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Wednesday, 08, Aug 2007 06:24
Britain's pensions black hole has closed up for the first time since 2002 but will return in the future, research out today suggests.
Pension schemes for FTSE 100 companies registered a £12 billion surplus by mid-July 2007, according to actuary and consultancy firm Lane Clark and Peacock (LCP).
This compares to a deficit of £36 billion in 2006, the fourth year in the row in which pension schemes were in the red.
Strong investment returns and higher real bond yields helped companies net total surpluses of £20 billion, with deficits reaching £8 billion.
Despite the upturn LCP partner Bob Scott warned that rising life expectancy means companies will continue to have difficulties maintaining their pension schemes in the future.
"The surplus may not survive once companies reflect the latest mortality projections in their accounts," he said.
"Also, companies whose pension schemes remain heavily invested in equities run material investment risk and the fragility of the surplus was highlighted by recent stock market falls. UK pension schemes are not out of the woods yet."