JLT Employee Benefits (JLT EB) has updated its monthly index showing the funding position of all UK private sector defined benefit (DB) pension schemes under the standard accounting measure (IAS19 / FRS17) used in company reports and accounts.

As at 30 June 2013, JLT EB estimates the total DB pension scheme funding position as follows:

DB Pension Index 30-06-2013

Click on Chart to Enlarge

Charles Cowling, Director, JLT Employee Benefits commented:

June may have seen the beginning of the end of the US Federal Reserve's $85 billion a month monetary experiment; this triggered a global asset sell off and a sharp increase in bond yields. On the whole, this has provided good news for pension scheme balance sheets with UK corporate bond yield increases more than offsetting the impact of asset price falls. But then there has just been the sharp downward revision to US first-quarter GDP growth; this prompted speculation that the Fed would hold back from tapering their quantitative easing programme and led to a slight rally in bonds.

"All this shows the uncertainty and worry around the US monetary stimulus being removed. With a new face in the Governor's seat at the Bank of England there is likely to be increased market volatility for some months yet. In such volatile markets it is important for pension schemes to consider and monitor trigger points for de-risking strategies so that market opportunities are not missed. In particular, there may be pricing and funding opportunities to settle and insure pension scheme liabilities.

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