FTSE 350 pension deficit soars as bond yields fall

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The pensions shortfall in the FTSE 350 climbed 23% to £90bn last month, as bond yields hit historic lows.

Returns on gilts and high-quality corporate bonds fell sharply in August, adding £17bn to July’s £73bn aggregate deficit for defined benefit schemes, according to data from Mercer.

The average funding level for the UK’s 350 largest companies fell from 89% to 87%. This was a further deterioration from December 2013’s £56bn deficit and 91% funding ratio.

However, Mercer senior partner Adrian Hartshorn urged businesses to ‘look through’ snap shot figures to establish a long-term pension funding strategy.