Pension schemes at the country’s 40 largest charities have a combined deficit of nearly £10bn, research shows.
The finance firm Hymans Robertson said that a combination of falling reserves and uncertain income was painting a “difficult picture” for the schemes.
It analysed defined benefit pension schemes – which are managed by employers and based on an employee’s salary – at the UK’s largest 40 charities by income.
The research also found that combined free reserves at these charities had fallen by 16 per cent in the last year, from £46bn to £39.5bn.
Overall income is up slightly, mainly thanks to one-off Covid-19 funds.
The analysis shows that the average charity pension deficit was worth a quarter of its reserves.
Hymans Robertson said: “Aggregate defined benefit liabilities remain around £9.5bn, with a fall in average funding level driven by a drop in scheme assets.
“A lack of movement in liabilities, coupled with a challenging income situation and a fall in reserves, paints a difficult picture for charities.”
Hymans Robertson noted that trustees of some pension schemes may want charities to “pay discretionary pension increases” in recognition of high inflation, but the research says: “We would anticipate that most charities will not want to contemplate agreeing to anything other than guaranteed pension increases.”
It also advised charities to speak with pensions trustees about how Covid-19 had affected the contributions needed to fund pension schemes.
The “slowdown in longevity” caused by the pandemic could reduce liabilities at defined pension schemes by up to 2 per cent, the reports said, citing the Pensions Regulator.
The research looked at finances at charities including Save the Children, the Salvation Army and Wellcome Trust.
Save the Children UK revealed last month that it faced “significant uncertainties” in its pensions schemes, and was seeking legal advice over fears that its pension liabilities could increase by as much as £60m.