Deficits not at record levels

 

The results follow research published by Mercer earlier this month which warned that defined benefit (DB) liabilities across the world are likely to have increased to record levels in 2010 (click here for full story).

Mercer said although equity returns over the past 12 months have generally been positive, sponsors of large DB schemes preparing their financial statements under current market conditions would still report larger pension scheme deficits than those 12 months ago.

The consultant said this has been caused by falls in corporate bond yields, which affect the value placed on pension scheme liabilities for accounting purposes. In some markets, bond yields have fallen by over a quarter. In the US, since the end of June 2008 AA corporate bond yields had fallen from 6.97% to just under 5% at the end of August 2010.

One respondent said: “We still reflect a fully-funded position”, while another replied: “Positive investment returns have provided a lift from the lows.”

One respondent revealed a funding level of 82.5% and another of 97%.

 

 

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• Topics
• Defined Benefit
• GP 100 Panel
• Mercer