UK pension liabilities increase to £7.6trn

London - UK pension liabilities increased by £1trn in the five years through 2015, government figures published on Wednesday show.

They stood at £7.6trn, with the state pension - a universal entitlement paid by the government - accounting for more than half the amount, the Office for National Statistics said. There were more than £2trn of entitlements linked to private-sector pensions.

Years of emergency monetary stimulus has left defined-benefit retirement plans facing growing deficits, but higher interest rates should offer some relief as funds use government yields as a discount rate to measure future obligations.

Plans were around 94% funded at the end of December, according to Pension Protection Fund.

“Long-term interest rates are unlikely to reach pre-crisis levels for many years, yet pension liabilities should keep shrinking as monetary conditions are normalised,” Jamie Murray and Dan Hanson of Bloomberg Economics wrote on Wednesday.

“Corporate balance sheets will therefore reap some benefit. To the extent that this has been a concern for businesses in recent years, that could help offset some of the costs associated with rising short-term interest rates.”

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.75
(+0.98)
ZAR/GBP
21.65
(+0.57)
ZAR/EUR
19.64
(+1.16)
ZAR/AUD
12.00
(+0.71)
ZAR/JPY
0.16
(+0.78)
Gold
1884.30
(-0.60)
Silver
23.22
(-4.10)
Platinum
888.01
(+0.90)
Brent Crude
41.31
(-3.06)
Palladium
2297.00
(+0.06)
All Share
54264.96
(-0.44)
Top 40
50042.44
(-0.55)
Financial 15
10071.85
(+0.68)
Industrial 25
73187.40
(-0.23)
Resource 10
53383.39
(-1.24)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1399 votes
It depends on how the funds are used.
73% - 9037 votes
No. We should have gotten the loan elsewhere.
16% - 1992 votes
Vote