Hymans Robertson have reported that the UK DB pension deficit reached £850bn, a £120bn increase over a six-week period.  Shortly thereafter, this number bounced back proving volatility is a massive issue for defined benefit schemes. 

Jon Hatchett, partner and head of corporate consulting at Hymans Robertson said when the figures were reviewed the numbers were jarring.  Uncertainty over Brexit “led to falls in growth asset prices.” 

HR experts say pension deficits are hitting organisations particularly hard.  Most major companies are large enough to support schemes, but high profile cases have helped shine the spotlight on the potential and very real risks that come along with schemes. 

This is not the first spurt of volatility DB pensions have seen this year.  Last February the collective UK DB deficit hit its highest level followed by another swing of more than £100bn in a six-week period.

Some human resource experts don’t feel that schemes need to be so volatile.  There are many schemes that take too much growth risk on with too little protection.  Many people also invest without a clear disinvestment plan, which can exacerbate market volatility.

Although it is a natural emotion for scheme holders to be worried and nervous, employment law experts urge people not to make knee jerk decisions based on current conditions that will pass.  DB schemes are long-term and it would make sense to have contingency plans in place to help during these rough waters.

While Brexit has already had an effect on pension funds, there is extreme uncertainty surrounding what kinds of challenges will present themselves for pension funds following this monumental event.