DB deficits drop despite sub-prime chaos

The UK’s largest 200 pension funds’ deficits fell from £13bn to £10bn last month. The consultancy attributes the improvements to rising bond yields and favourable investment returns. During August 2007 the deficit fell below £1bn and peaked at more than £26bn, compared to its August 2006 peak of more than £60bn. Aon says AA corporate bond yields, the benchmark measure of pension scheme liabilities, have steadily risen over the year to dampen the effects of the market downturn. The increases to the AA corporate bond spread, which has fallen to 0.59% during the year and reached 0.98% in...