Pension scheme liabilities remain stable

10 April 2012

Xafinity warns that long term uncertainty still remains, with regards to future inflation expectations.

The UK’s Defined Benefit pension scheme liabilities remained unchanged in March, according to the latest figures from Xafinity, part of the Equiniti Group, as equity markets and bond yields show little change since the end of February. Pension deficits increased by £24 billion as the value of scheme assets decreased slightly.

However, despite the recent market calm, Xafinity warns that long term uncertainty still remains, with regards to future inflation expectations.

Robert Hunt, director at Xafinity Corporate Solutions, part of the Equiniti Group, said: “There is a lot of uncertainty around what impact the unwinding of Quantitative Easing will have or indeed when it will begin, but it has clearly distorted the market for both conventional and index-linked gilts, making it difficult to predict how inflation expectations will evolve in the next few months and years. In the meantime, companies will continue to contend with much larger pension scheme deficits than they faced a year ago.  Given the recent market calm many will hope that the equity rally since the start of the year can gain further momentum, helping to reduce deficits.”