The accounting deficit of defined benefit pension schemes in the United Kingdom increased in January, according to the latest data from Mercer.

Mercer's Pensions Risk Survey found that the estimated aggregate IAS19 deficit for the defined benefit pension schemes of the FTSE350 companies stood at £75 billion, or a funding ratio of 88 percent, at the end of January, compared to £62 billion at the end of 2012 and a funded ratio of 89 percent.

Over the month there has been a significant increase in market implied long-term retail price inflation which serves to increase the value of future pension liabilities. This has been partially offset by a smaller increase in corporate bond yields.  The net effect was an increase in the IAS19 value of pension scheme liabilities over the month, from £588 billion to £610 billion. Asset values also increased from £526 billion at the end of December to £535 billion at the end of January, which has offset some of the increase in the value of liabilities.