Lehman collapse wipes £9bn off pension schemes

Sep 15 2008

Pension schemes saw £9 billion wiped off their value today as stock markets dived following the collapse of US investment bank Lehman Brothers.

The UK’s 200 biggest defined benefit company pensions, which includes final salary schemes, saw the value of their assets dive by £9 billion as a result of the turbulence, according to Aon Consulting.

The fall was the fifth biggest recorded in a single day this year, and leaves the schemes collectively facing a £35 billion funding shortfall, compared with one of £26 billion at the close of trading on Friday.

Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “Today’s market slump has wiped £50 billion off FTSE 100 share prices.

“In terms of pension schemes, this translates to asset losses of £9 billion for the 200 largest UK privately sponsored pension schemes, of which £5 billion is in relation to FTSE 100 companies.”

The ongoing stock market volatility this year has pushed many pension schemes that had been in surplus back into deficit.

This fall in the value of scheme’s assets, combined with new accounting regulations that are being introduced, is likely to lead to a further increase in the number of schemes that are closed to new members or future accruals.