Aon said that the fall was mostly due to corporate yields rising from 5% to 5.2% and gilt yields climbing from 4.4% to 4.6%. The consultant also attributed the drop to increased cash contributions from plan sponsors, which cut deficits by an estimated two billion pounds sterling.
“The cost of pension scheme benefits has been falling as pension schemes are able to earn a higher rate of interest on bonds, which is the investment vehicle the UK accounting standard assumes you will invest in,” said Andrew Claringbold, a principal at Aon, in a release.
Aon included the deficits of 200 UK pension schemes in its survey.
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