Funds fall into deficit as markets decline

12/08/2008

Workplace pension funds fell in to the red last month, the Pension Protection Fund (PPF) has said.

According to the body, June's overall surplus of £8.3 billion fell to a deficit of £24.1 billion.

This is because the performance of stocks and bonds - in which pension funds invest - has been hit hard by the credit crunch, and has therefore continued to decline.

In July 2007, by way of comparison, the surplus stood at £83.3 billion.

This was immediately before the onset of the global financial crisis, however.

"Over the past year, the negative impact of equities [ie, shares] on scheme assets, combined with falling bond yields, have led to an overall worsening of the funding position," the PPF said in a statement.

"With lower bond yields resulting in a 8.6 per cent increase in aggregate liabilities, while weaker equities [shares] have reduced assets by 7.4 per cent," the statement added.

Tags; Current UK Economy, Retirement Money Problems,

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