Telegraph

8th December, 2008

The Pension Protection Fund (PPF), the pensions lifeboat fund, said yesterday that 6,690 pension schemes had a deficit at the end of last month, compared with 6,468 in October. The schemes in deficit at the end of last month face a collective funding shortfall of £155bn. Just one year ago, this figure was £58.3bn.

Once pension funds with a surplus are included in the figures, the total funding shortfall faced by all defined benefit schemes was £136bn in November, compared with a deficit of £97.3bn at the end of October.

In November, the total number of schemes in surplus was 1,047 – just 14pc of all schemes – compared to 1,273 in October. In November 2007 there were 2,400 schemes in surplus.

Last month alone there was a 0.5pc decrease in assets due to falling UK and global equities. At the same time, lower gilt yields in general led to an increase in liabilities of approximately 5.2pc.

“Over the past year, the falling equity markets and bond yields have led to an overall worsening of the funding position. Lower bond yields resulted in a 4pc increase in aggregate liabilities, while weaker equities have reduced assets by 18.7pc,” the PPF said.

The PPF was established three years ago to pay compensation for members of defined pension schemes when their employers became insolvent. Pensions experts predict an increase in claims in the current environment.

Woolworths, the stricken retailer whose retail and distribution arms are in administration, could become one of the biggest burdens on the PPF if a last-minute rescue deal cannot be struck to save the retailer.