UK occupational pension funds are four times less likely to be fully funded than their American counterparts, according to research by Aon Consulting. The company has estimated that only 5% of UK pension plans are fully funded, compared to 20% of US employer pension schemes. In the UK, where company pension assets total £350 billion, the average plan deficit of a company is seven months of profits before tax, compared to two months worth of profits in America. Aon Consulting believe that even though contributions have doubled in the last couple of years, they haven't been sufficient to compensate for a combination of falling bond yields, increasing life expectancy and poor equity performance.
Our view:
We are not sure why this is. We can only assume the US has far stricter funding rules.