UK - Higher than expected inflation could end up helping the pension schemes of FTSE 100 companies, according to a study by PensionsFirst.

According to its calculations, if inflation exceeded the expected market rate by 1.4%, it would exceed the mandatory pension increases while scheme assets would continue to rise.

The company released its analysis on the same day the Office of National Statistics (ONS) reported that the retail price index, one of the two measures for inflation applied to UK pensions, remained at 5.2% in May.

Matthew Furniss, assistant vice-president at PensionsFirst, said: "Given the ONS inflation figures released today showing that inflation remains above the cap for most pension increases of 5%, we are not far away from the point at which increases in inflation and inflation expectations should start to reduce rather than increase deficits."

Benjamin Reid, chief executive, added that an individual scheme's tipping point would vary depending on its benefit structure.

"At a time when inflation is rising and becoming more uncertain, pension schemes can benefit from understanding their own individual risks from inflation in both the short term and longer term, and across liabilities and assets," he said, adding that it was important to understand a scheme's sensitivity to inflation to make informed decisions on de-risking.

In other news, the Pension Protection Fund (PPF) saw its funding fall slightly at the end of May, revealing a £13.5bn (€15bn) deficit across the PPF 7800 index.

The increased deficit is due to higher aggregate liabilities, outstripping a £1.2bn increase in assets across all schemes, with only 34% of pension funds reporting a surplus in May.

Explaining the fluctuation, the PPF noted in its monthly report that the FTSE All-Share index fell by 1.1% compared with the end of April.

It added: "During May, rising bond and property returns more than offset the decline in equity markets, causing a 0.1% increase in assets. Liabilities also rose, by 1.7%, due primarily to the fall in gilt yields."

Finally, the National Union of Teachers (NUT) and ATL, a union for education workers, have seen overwhelming support for a strike opposing changes to public sector pensions.

The NUT recently balloted workers on proposed changed to the Teachers' Pension Scheme, which would see contribution increases, as well as a number of other changes, criticised as an "unnecessary attack" on pensions.

Christine Blower, general secretary of the NUT, added that there was no alternative but to support strike action.

"It is disgraceful the government is pressing ahead with its reforms, which will affect teachers' pensions. It knows they are affordable. This is a policy that has nothing to do with economics and everything to do with politics.

"It is not too late for common sense to prevail and for these unnecessary changes to be stopped."

Public sector union Unison has warned that more than 1m workers will be balloted on strike action regarding changes to their pensions in the near future, which would potentially lead to strikes on a scale not seen in five years.

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