According to the Pension Protection Fundâ??s 7800 Index, a monthly tracker of the total assets and liabilities of schemes where benefits are insured, the total deficit of schemes with shortfalls stood at £194.6bn at the end of August, up from £179bn a month earlier. The PPF said that 85 per cent of all UK schemes were in deficit.

Even surging equities markets last month were insufficient to offset the effects of falling gilt yields. During August, strong gains on world stock markets increased the value of total assets by 3.3 per cent. This included a surge in UK equities markets of 7.1 per cent. But yields on UK government gilts fell, raising liabilities by a larger 5.2 per cent.

John Ball, head of defined benefit consulting at actuarial consultants Watson Wyatt, noted that the PPF deficit represents a real shortfall only in the most dire circumstances, in which every employer offering a pension scheme suddenly became insolvent.