UK - Better trustee scrutiny of their sponsoring company in relation to worsening economic conditions could help manage pension fund risk, according to Aon Consulting.
Marcus Hurd, senior consultant and actuary, Aon Consulting, said: "The security of pension benefits is critically related to the strength of the employer providing those benefits.
"Pension schemes have two sources of security - the cash within the scheme and the employer behind the scheme."
Hurd added: "The argument for trustees to conduct more frequent monitoring than an annual assessment gets only stronger as the economic outlook worsens."
Both Aon and Watson Wyatt reported leading UK company pension schemes had fallen into deficit from surplus at the end of May.
Aon said the largest 200 UK privately sponsored company final salary pension schemes fell by £36bn (US$71.8bn) to an aggregate deficit of £30bn.
Watson Wyatt found inflation had hurt pension funds by pushing up liability costs whilst falling share prices pulled down the value of assets.
Both firms noted improved corporate bond yields had marginally assisted funding positions, but not enough to prevent a crash back into deficit.
Rashpal Bhabra, head of corporate consulting, Watson Wyatt, commented: "Surpluses reached a record level by the end of March, partly because of the way the credit crunch increased corporate bond yields, but pension funds are now back in the red.
"This is a stark reminder of how volatile the short term funding positions reported in company accounts can be."
Bhabra continued: "Companies with defined benefit pensions have offered their staff protection against prices rising in future but have limited protection against this themselves.
"Those who still have staff in defined benefit schemes will hope recent events have at least made them appreciate how valuable an inflation-protected pension can be," he concluded.
Watson Wyatt reported FTSE100 company pension funds had fallen from an aggregate £23bn surplus at the end of May to a deficit of £8bn.
Over the last three months, the funding position of this group had worsened by some £50bn, the firm said.
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