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Pensions "Leap" Back Into Surplus with Record Turnaround
The London Stock Exchange
December 3, 2008
United Kingdom
The 200 biggest privately-sponsored pension schemes wiped out their accounting deficit in November with a £38 billion improvement in their funding position - the biggest monthly increase in history.
As a result of the upswing, the schemes have "leapt back" to a surplus of £23 billion, according to figures from Aon Consulting.
The company said the main factor behind the "dramatic" turnaround is falling projections for future inflation, which have declined from a record high of 4.2 per cent in July to 2.6 per cent last month.
Aon added that the latest turn in fortunes of the Aon 200 index adds to a year of unprecedented volatility. Between 2001 and 2007, there were six daily swings of more than £10 billion in pension schemes' funding positions - so far this year, there have been 21.
Marcus Hurd, Aon Consulting's head of corporate solutions, said he has "never seen anything like it".
"The biggest challenge for 2009 is to ensure long-term strategies are in place and ensure that pension schemes are able to take advantage of opportunities as and when they arise," he remarked.
Aon is a pensions, benefits and HR consultancy with over 500 offices in 120 countries.
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