Deflation could add £1bn in extra liabilities

The consultant said it was the biggest pension scheme deficit recorded in the past year. As a consequence of the shift Aon is urging the government to review the way in which indexation promises are implemented - to help employers to manage their pensions burden. Aon said as inflation falls and deflation becomes a reality, the legal requirement to increase pensions in line with inflation now represents a significant risk to employers. During a period of deflation, schemes are not able to reduce pensions that are being paid. However, once that period is over and prices come back to pre...