Pension schemes back in the black

The UK's largest defined benefit pension schemes are back in the black after seeing the biggest improvement in their funding position on record during November, figures showed.

The 200 biggest defined benefit pensions, which includes final salary schemes, collectively had a £23 billion surplus at the end of November, compared with a £15 billion deficit at the end of the previous month.

The schemes saw their funding position improve by £38 billion during the month, the biggest monthly rise in record, according to Aon Consulting.

The main driver behind the improvement was a continuing fall in inflation expectations.

Defined benefit pension schemes have suffered from high levels of volatility during 2008.

Between 2001 and 2007 there had been only six daily swings of £10 billion or more, but so far this year there have been 21 such swings, including six in eight days during October.

Marcus Hurd, head of corporate solutions at Aon Consulting, said: "It has been one hell of a year and I have never seen anything like it, with market conditions frequently changing dramatically on a daily basis.

"We have never known trustees and employers to express so much concern, the pensions picture is not black and white, however, and current economic factors present opportunities as well as exposing schemes to risks.

"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."

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