Defined Benefit Schemes 'Drop £36bn in a Month'

Around 75 per cent of defined-benefit pension savings schemes are currently in the red, new research shows.

Management consultants Aon released the study, which looked into how well Britain's biggest defined benefit funds performed over June. It found that a collective £6 billion surplus from the end of May had been transformed into a £30 billion shortfall.

Credit crunch-induced market volatility - to which investment funds are heavily exposed - has been blamed for the poor performance. Accordingly, Aon found that just 25 per cent of defined benefit savings vehicles now remain in surplus, down from 56 per cent in May.

However, the firm was quick to reassure investors that the monthly drop should not encourage people to stop putting their retirement savings into the schemes. "Pension schemes' finances are expected to be volatile and for most schemes, this month's results should not cause undue concern," Marcus Hurd, senior consultant and actuary at Aon Consulting, said.

"Although it is a significant sum, UK pension scheme sponsors can absorb a one month loss of £36 billion."

News of the Aon study comes in the wake of similar research from pension specialists Watson Wyatt, who found that the workplace schemes of FTSE 100-registered companies dropped into a £8 billion deficit last month.

At the end of May, these schemes were found to have registered a £23 billion surplus.