Pension fund deficits continue to rise
It has been revealed that the U.K.'s top 200 pension schemes are in deficit to the tune of £100 billion. While there has been intense speculation over the last few weeks regarding the size of pension scheme deficits in the UK, the fact that the £100 billion figure has been breached for the first time ever is a massive blow to the sector.
Even though there are obviously enormous implications for pension scheme members of final salary schemes in the UK, where their scheme is in deficit, it will in many ways speed up a cleanup of the sector and a realignment of regulations. There are many reasons as to why the current pension fund deficit has ballooned so dramatically over the last few years, with a mixture of increased tax liabilities, extended life expectancy in the UK and reduced investment returns in the short term.
However, the real concern amongst UK employees is the fact that sponsoring companies will be forced to increase their pension fund contributions which could in some cases have a material impact upon the smooth running of the underlying business. Even the Pensions Regulator appears to be concerned about the short to medium term outlook and there is a lack of funding to cover all potential pension fund collapses in the short to medium term.
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