Boost for pensioners as a soaring stock market sees pots increase

The rising value of stocks and shares propelled UK pension funds into the black for the first time in a decade, analysts revealed.

Experts claim that strong investment growth and £13billion worth of injections from companies into their pension plans helped reverse the £31billion deficit reported on balance sheets the previous year.

The escalating value of stocks and shares means a major boost to people saving for their old age.

The growth concerns pension schemes attached to companies in the FTSE 100, an index of the 100 largest firms listed on the London Stock Exchange.

Since the 2016 EU Referendum, the FTSE 100 has hit a series of highs.

This week alone it has smashed records twice – on Monday and again yesterday.

The exchange is up 13 per cent in the past two months alone – amounting to more than £200billion added to the value of Britain’s top 100 companies.

The analysis was provided by consultants Lane Clark and Peacock. Malcolm McLean, a consultant with actuaries Barnett Waddingham, said: “This is good news for both employers and members of FTSE 100 pension schemes.

“Although we should never get carried away by movements either upwards or downwards in the stock market arising as a result of market or economic conditions, this is the first time for years that FTSE 100 pension schemes have clearly swung into surplus when measured on an accounting basis.

“It does indicate a growing confidence in the economy which in turn will provide more encouragement for those employers who may not have felt as confident previously about continuing to provide and fund their defined benefit schemes.

“It may also help to reduce their growing deficits which many schemes have had to grapple with in recent years.

“For individual members of schemes with funds directly invested in shares it will mean an increase in their funds and for those on the brink of retirement will be especially welcome as it will clearly boost their income in retirement at, for them, exactly the right time.”

Pensions are invariably invested in the markets and a rising market can mean more money when it comes time to cash in the savings to live off in retirement.

Laith Khalaf, a senior analyst with investment specialists Hargreaves Lansdown, said: “The FTSE is flying high and that’s great news for anyone with a pension, who will find the value of their retirement fund boosted by the stock market’s recent performance.

“Of course, we have at times seen dramatic falls in the FTSE too, though for long-term investors the stock market has been a powerful ally.”

However, Phil Cuddeford, of business consultants Lane Clark and Peacock, had a warning for all pensioners.

He added: “Although that’s good news, history has proven that such accounting surpluses can quickly be wiped out by deteriorating market and economic conditions.”