FTSE350 firms slash pension deficits by £16 billion in May

A dramatic £16bn pension deficit cut reveals FTSE350’s strongest financial shift in years. Could this mark the end of long-term funding struggles for UK firms?

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2026 January 1 . 7:26 AM

1 min read

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FTSE350 firms slash pension deficits by £16 billion in May

UK companies in the FTSE350 cut their pension deficits by £16 billion in May. This sharp drop follows a steady decline over the past two years, easing financial pressure on firms. The latest figures show a significant improvement in pension funding levels across the board.

The total pension funding gap for FTSE350 firms fell to £34 billion by the end of May. This marks a 30% reduction in just one month, continuing a downward trend from £156 billion in September 2022.

Asset valuations rose by £15 billion during May, reaching £791 billion. At the same time, liabilities dropped by £1 billion to £825 billion. The decrease in liabilities was driven by lower inflation expectations and a fall in corporate bond yields. No individual companies were named as the main contributors to the £16 billion improvement. The overall shift reflects broader market conditions rather than specific corporate actions.

The latest figures leave the pension deficit at its lowest level in years. With assets growing and liabilities shrinking, the financial outlook for FTSE350 pension schemes has strengthened. The trend suggests a more stable funding position for UK corporate pensions moving forward.