UK - Pension scheme deficits have failed to improve despite significant rises in equity markets, latest research revealed.
Aon Consulting said the deficit of the 200 largest privately sponsored defined benefit schemes was £72.8bn (US$122.6bn) at the end of July - down from £73.3bn at the end of June.
The consultant said equity markets did not improve fast enough during the month to offset falls in corporate bond yields, which are used to calculate the accounting value of a pension scheme.
And it said, as the economy starts to show signs of recovery, businesses may see their pension scheme deficit grow even further as a result of the low values placed on liabilities when corporate bond yields are high - estimating the deficit could leap by a further £40bn should bond yields fall to long-term, pre credit crunch levels.
Aon Consulting consultant and actuary Sarah Abraham said: "Equity market gains have not been substantial enough to offset the falls in corporate bond yields, meaning that liabilities have been growing faster than assets can recover, therefore pushing up deficits.
"As the economy recovers, employers will have to hope that equity values rise faster than corporate bond yields fall or they may need to prepare themselves for some of the worst year end accounting results on record."
This comes as updated figures from Pension Capital Strategies, released today, estimated the total deficit in the pension schemes of the FTSE100 amounted to £90bn at June 30 - a position £82bn worse than at the same point last year
PCS managing director Charles Cowling said these figures come at a time when the Pensions Regulator is encouraging pension trustees to be increasingly prudent - and toughen the assumptions used to calculate the pension scheme deficit.
Cowling said: " We believe that the Regulator's stance of seeking that trustees react to the economic downturn by putting even more pressure on companies will have major implications for companies' attitudes towards their pension schemes."
He added: "It is not surprising that companies are reacting to this combination of tough economic conditions and an increasingly challenging regulator by closing down final salary pension schemes. We believe that within the next 2 to 3 years the very large majority of final salary pension schemes in the private sector will be closed to all employees."
PCS also found the shift from equities to bonds appeared to be accelerating.
It said, over the year to June 30, the average pension scheme asset allocation to bonds has increased to 49% from 41% - representing the largest 12-month shift in investment strategy for more than 20 years and coming on top of a very significant shift, from 35%, the previous year.
PCS said that, over just two years, bond holdings of FTSE 100 pension schemes have increased by more than a third.
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