About 86 per cent of defined benefit pension schemes were in the red at the end of November after stock market falls hit the value of their assets, new figures showed.

The Pension Protection Fund (PPF), the government-sponsored, industry-funded insurer, said 6,690 pension schemes had a deficit at the end of the month, compared with 6,468 in October, with these schemes collectively facing a funding shortfall of £155 billion.

The total funding shortfall collectively faced by all defined benefit schemes, once those in surplus are factored in, widened to £136 billion during the month, compared with a deficit of £97.3 billion at the end of October.

The latest figure also represented a considerable deterioration from November last year when pension schemes had a collective surplus of £26.1 billion. Those companies currently with underfunded schemes include many of the leading names in UK business including BT, British Airways and the BBC.

The PPF said the worsening funding position had been caused by a combination of the value of schemes’ assets falling, while their liabilities increased.

The value of pension schemes’ assets dropped by 0.5 per cent in November due to falling UK and global equity markets, while lower gilt yields caused their liabilities to soar by 5.2 per cent. In the past year, lower bond yields led to a 4 per cent rise in aggregate liabilities.

Meanwhile, weaker equity markets slashed the value of pension funds’ assets by 18.7 per cent. However, the PPF noted that as bad as the current shortfall is, it remains about £50 billion less than it would have been in the trough of the last downturn in February 2003, if measured on a like-for-like basis.

The Pension Protection Fund is designed to pay compensation to members of final salary pension schemes who lose their pensions when their company collapses with a deficit in its pension fund.

In its last financial year, it had a deficit of £517 million and that only applied to shortfalls at schemes where the employer has already become insolvent. This does not take into account the possible shortfalls stemming from an expected wave of corporate insolvencies as the UK heads into recession.

Times Recommends

• How to sell your home in a downturn
• How to boost your spending power
• Unemployment benefits explained