PPF reveals pension deficit figures

Thursday, March 11 2010

A cut in the deficit of final salary pension schemes has been reported by the Pension Protection Fund.

In January there was a deficit of £51.9 billion, but this had improved to £15.1 billion at the end of February.

Managing director of Caledonia Asset Management Gordon Forbes explained that any final salary pension scheme's cost can be assessed by asking whether there are enough assets to buy out any liabilities.

He claimed there has been no scheme over the last four to five years that can do that and this trend will probably continue in the future.

"Every scheme in the UK is in deficit and will always be in deficit, until the whole scheme winds down to the point where there won't be anyone left," Mr Forbes explained.

Larger schemes often have many high costs because there are lots of advisors involved and Mr Forbes predicted that soon nobody in the UK will have final salary schemes, aside from government officials.