UK’s £2tn pension liability exceeds GDP for first time

British private sector defined benefit, or final salary, pension-scheme liabilities of £2tn have outstripped Britain’s GDP for the first time, due to ultra-low interest rates, said the pensions consultants, Hymans Robertson.

Because of low interest rates, the pension funds are struggling to make the investment returns needed to pay their pensioners. The £2tn pension hole exceeds Britain’s GDP of £1.8tn, Hymans Robertson said.

“There’s a pressing need for DB [defined benefit]schemes to focus on income-generating assets, rather than simply chasing capital growth,” the consultants said.