The outcome of the EU referendum has come as a blow to pension schemes, which have both bonds and stocks in their portfolios
by Marion Dakers
Britain’s gold-plated pensions now have record-breaking liabilities of £1.75 trillion after the EU referendum triggered a rout in their core gilt and equity holdings, highlighting the difficulty of funding the UK’s retirement needs.
The country has almost 6,000 defined benefit schemes, which are obliged to pay their members an amount in retirement often tied to their final salary. Just 950 of these schemes were in surplus on June 30, with the rest hoping to make up the shortfall from long-term investment returns.
In total, defined benefit funds are £383.6bn underwater, compared to £294.6bn just a month ago, as the tumbling UK government bond yields added to liabilities while global stock markets wiped value from the schemes’ equity investments.