Britain’s workplace pensions have a black hole of nearly £190 billion, according to the latest data.
The government’s lifeline for retirement savers, the Pension Protection Fund has revealed two out of three schemes managed by the fund are in the red.
The news dampens the retirement hopes of millions of workers.
Although the PPF rescues at risk funds, going into protection when a company with a pension scheme goes to the wall.
The bad news also means that new retirees drawing down on their lifetime savings for the first time can expect reduced benefits.
The data from the PPF for July 2018 highlights 3,537 schemes are in the red to the tune of £186.5 billion – which is equal to 63% of the schemes under the supervision of the fund.
Pension regulators claim companies paying out dividends to shareholders at the expense of fully funding their retirement schemes are one of the causes of the problem.
“Trustees should negotiate robustly with the sponsoring employer to secure a fair deal for the pension scheme, while employers should balance the interests of pension savers with returns to shareholders and investors,” said a spokesman for The Pensions Regulator.
The scheme looks after the retirement savings of millions of workers who could have lost their savings when their employers went bust.
Recent additions include British Home Stores and Carillion, who had combined liabilities of £1.5 billion.
FTSE100 companies with huge pension liabilities include BT with £9billion, Shell with £6.9billion, BP with £6.7billion and BAE £6.6billion, although none of these schemes are currently at risk of entering protection.
The PPF continues to pay pensions at the same level for retirees already receiving a pension when a scheme is taken over.
But if a worker retires after the scheme enters protection, they can expect to receive 90% of their expected benefits, subject to a maximum annual cap depending on length of service and expected benefits.
Around 133,000 retirement savers are receiving average annual payments of £4,479.64 each from the PPF. Since the fund was established in April 2005, 33.6 billion has been paid out as retirement benefits. Another 103,000 pensions that have yet to pay out are under protection, says the fund.