FTSE 100 pension schemes lose £86bn

Pension schemes run for employees of the top 100 companies listed on the stock market lost £86 billion in the last year, plunging them into deficit.

The turmoil in the stock and corporate bond markets has brought havoc to the pension funds of FTSE firms, leaving them in the red to the tune of £50 billion.

Pension experts are increasingly concerned that companies will struggle to fund the retirements of their longest-serving staff, especially given how much longer many of them are living.

Final salary pension schemes, where staff receive a high percentage - perhaps two-thirds - of their pay at retirement every year until they die, are looking increasingly difficult to afford, the industry recognises.Figures today from Pension Capital Strategies show that at the end of the first quarter of the year, FTSE pension funds are looking at a black hole of £50 billion.

This is partly as a result of government legislation demanding extra security, which is forcing the funds to buy ever greater portions of bonds rather than equities.

Charles Cowling of Pension Capital Strategies said: "The massive shift of pension scheme assets out of equities and into bonds stems not only from the recent turmoil in markets but is an inevitable consequence of successive government legislation."

The average large pension fund now holds 47% in bonds, up from 40% a year ago.

That in turn is up from 34% in 2007.