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Pension fund deficits hit the headlines

A report by the Pension Protection Fund has shown that the largest 7,400 pension schemes in the UK with defined-benefit arrangements are now around £2.2 billion undercapitalised after a £300 million surplus situation in March. The massive turnaround from a small surplus to a massive shortfall is purely and simply because of the large fall in the UK stock market since election concerns began to hit home.

The creation of a coalition government yesterday is likely to put the minds of investors at ease in the short-term but there are long-term concerns regarding the UK financial situation and a potential reduction in the UK's AAA credit rating. While there is no doubt short-term anxieties have been curtailed somewhat after David Cameron took the keys to number 10 Downing St. this is only the start of a very difficult and potentially dangerous road to recovery.

Only time will tell whether action taken by Gordon Brown and the Labour Party have created a base for the future and rather perversely Gordon Brown could turn out to have been the most forward thinking Prime Minister for many years. David Cameron is the youngest UK Prime Minister for nearly 200 years and is certainly being catapulted into a situation which very few with years of experience would welcome.

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