The combined pension liability of the largest charities in England and Wales rose by £2.5bn over the past year, new figures show.
A report from financial advice firm Hymans Robertson finds that the aggregate defined benefit liabilities of the largest 40 charities in England and Wales by annual income totalled £12bn in their most recent accounts, covering the period from March 2021 to August 2022.
The report says the average pension deficit was 10 per cent of unrestricted reserves across the 40 organisations.
It found that combined reserves of those organisations grew by almost a quarter to £49bn, up £9.5bn on last year due to “strong investment performances”.
The report also shows that unrestricted income was up despite overall income being slightly lower than last year, but it has still not yet reached pre-Covid-19 levels.
The report says the figures highlight the economic volatility of 2022.
It says: “The market volatility led to some excellent pricing opportunities for schemes already in the market, and, for other schemes, significant improvements in their funding position such that their long-term goal to buy-out is now a more viable target in the short term
“This cost-of-living crisis is putting a strain on charitable expenditure as well as causing upwards pressure on salaries across the industry.
“Since April 2021, there’s been a 17 per cent increase in the cost of living compared with a 42 per cent decrease in the cost of defined benefit pension accruing.”