It was the Government’s intention that the introduction of the Pensions Regulator and the Pensions Protection Fund a year ago would bring new light into the world of pensions and be a turning point for gaining more control of pension deficits. But 12 months on, the total deficit of UK defined pensions is only slightly lower.

No one can deny that companies and trustees have been working extremely hard over the past financial year to address their pension challenges. In fact, the past year has probably been the most challenging in pensions history. But, for reasons beyond the control of most, pension schemes have made limited improvements to their deficits. Statistics from an analysis by PricewaterhouseCoopers indicate that year to date the total deficit of UK defined pension schemes for companies within the FTSE 350 is £45 billion, only 10 per cent lower than one year ago (see graph above).

However, a comparison taken from the start and end of the year does not reflect the changes that have occurred in the last 12 months. There has been enormous volatility in deficit levels during this time.

At the start of the year, total deficits in the pension schemes of the UK FTSE 350 companies were estimated by PricewaterhouseCoopers to be £50 billion. On January 18, deficits reached their maximum level of £87 billion, a day when gilt yields fell dramatically following a sudden increase in demand from pension funds. At this point, deficits were 73 per cent higher than at the start of the year. Fortunately for companies, this huge hike in their deficits was unlikely to have had an impact on company reporting, as few have year ends of January 18. The situation may have been somewhat different if deficits had peaked on March 31.

In less than three months since January, deficits have almost halved. This is due to the combined effect of annual yields and bonds having increased by 0.5 per cent and the total return on FTSE-All Share index been 8 per cent.

So where do we go from here? The pension deficit issue is going to take considerable time to remedy – and from this evidence, far longer than just a year to see any improvements. But the future still looks uncertain.

Not all pension schemes appear yet to have reflected increasing longevity in their calculations. If the expected return on bonds pick up, then higher equity markets may well make trustees think more seriously about taking the plunge and adopting appropriate liability driven investment mandates and benchmarks.

All will be watching this space to see how the Government will respond to the Turner Commission. Employers must also deal with additional obligations, such as the new age discrimination legislation. Some employers may struggle with the role of retirement planning as part of their overall reward to executives and the wider workforce.

It’s without doubt that employers and trustees will start to consider more imaginative financing solutions and benefits packages to tackle the deficit problem in the future.

Marc Hommel is a tax partner and head of the pensions practice, PricewaterhouserCoopers LLP

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