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Britain's pensions black hole narrows to £580bn

By Staff Reporter

Britain's mammoth funding gap for gold-plated company pensions stands at nearly a third of the country's economic output despite a £50bn boost in November, according to a study.

A report by PwC showed that the deficit for so-called defined benefit pensions - such as final salary schemes, which guarantee an income in retirement - narrowed by around £50bn to £580bn last month.

This marks the third month in a row that the funding gap has improved after hitting a record high of £710bn in August.

But the pensions black hole is still £110bn higher than it was at the start of the year and is equivalent to almost a third of the UK's entire gross domestic product (GDP).

PwC's Skyval Index gave a snapshot of the health of the UK's 6,000 defined benefit pension funds.

It revealed the battering pension schemes had taken since the Brexit vote, with rock-bottom interest rates taking a toll after the Bank of England halved its base rate to 0.25%.

BT recently revealed its pension deficit surged to £9.5bn at the end of September, from £6.2bn three months earlier.

Barclays has also seen its pension fund slip into the red by £1.1bn from a surplus of £800m last December, while Debenhams likewise suffered a reversal to a £4.1m deficit in September against a surplus of £26.2m in August last year.

Firms have blamed a sharp reduction in bond yields, which increases the pension liabilities, as a result of the Bank's economy-boosting action after the EU referendum.

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