Defined Benefit Schemes 'Slump In Value'

Further volatility on the global stock markets has led to final salary pension savings falling in value by £45 billion last month, the Pension Protection Fund said yesterday.

According to the new data, the collective surplus of all defined benefit schemes dropped from £53.4 billion to £8.3 billion from May to June. A year ago, the surplus stood at over £130 billion.

The total shortfall among schemes in deficit has now hit £63 billion, £17 billion up over the previous month and £41 billion up on 12 months previously.

Across the month, the flagship FTSE 100 index, which is much traded-in by pension savings funds, lost around ten per cent of its value. The broader FTSE All-Share index also dropped in value by seven per cent, with the volatility blamed on the global credit crunch by analysts.

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

There is currently a total of 7,800 defined benefit pension savings schemes in the UK, all of which were encompassed by the PPF's survey. A total of 5,499 schemes were found to be in the red by the end of June.