Pensions Support Index June 2014

Our latest Pensions Support Index ("PSI") shows that FTSE350 companies’ ability to support their defined benefit pension schemes has dramatically improved over the past six months and is close to reaching pre-recession levels.

The PSI has shown a 7 point increase over the second half of 2013 to 83 (out of a possible score of 100), which has been due to the combination of improved company performance and a decrease in the size of pension scheme deficits, driven by higher gilt yields.

This provides companies with the opportunity to consider how employer covenant – being a measure of the employer’s ability to meet its obligations to its pension scheme - can be factored into managing their scheme. This is central the Pensions Regulator’s new code of practice, which focuses on establishing the link between employer covenant, funding and investment strategy.