Final salary pension schemes reached a record £21bn surplus at the end of February, according to human resources consultancy Aon Consulting.
Aon says 62% of the 200 largest final salary schemes reached surplus, from a £12bn deficit at the end of January.
However, the consultancy says few schemes would achieve a surplus under proposals by the Accounting Standards Board and a mortality assumption consultation from The Pensions Regulator.
Under the combined proposals, February’s actual surplus of £21bn would fall to a deficit of about £180bn if recalculated.
The Accounting Standards Board proposes companies should have to record pension deficits in their company accounts related to risk-free rates, which would add about £120bn to Aon’s pension scheme index.
Meanwhile, The Pensions Regulator proposes to raise life expectancy assumptions for new pensioners retiring at age 65 from around 85 to 90, adding more than £75bn to reported liabilities.
Marcus Hurd, senior consultant and actuary at Aon Consulting, says: “These proposals add more pressure on companies to close their final salary schemes to members or find ways to terminate their liabilities. Tomorrow’s generation of pensioners are being required to take pensions risk themselves, whereas many companies had historically agreed to shoulder the responsibility.
“The current pensions environment punishes companies for demonstrating paternalism to their employees. The future of the UK pensions industry would be best served by encouragement rather than regulation or interference.
“Continued uncertainty over the future of final salary pensions means it is likely that company sponsors will increasingly look towards the various forms of settling or managing their pension liabilities, especially as the cost of doing so is falling.”
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