October saw a significant fall in the deficit faced by defined benefit pension schemes, the pensions watchdog has announced.

The Pensions Protection Fund (PPF) said the shortfall fell from £148.9 billion in September to £97.6 billion by the end of October, pointing to the introduction a new accounting scheme which reduced their liabilities by around £71.2 billion as the reason for the drop.

PPF officials added the deficit would have soared by £19.9 billion to £168.8 billion had the new regime not been introduced, blaming stock market falls for the drop in pension value.

The pension deficit remains much larger than its October 2008 figure of £77.6 billion regardless of the money-saving accounting system.

Some good news was recorded with a drop in the number of only part-funded pensions - down from 84% in September to 79.5% - and a 13.6% spike in the value of pension schemes' assets.

But this gain was more than offset by a 14.7% jump in the value of the liabilities faced by pension programmes, due largely to lower gilt yields.

The report claimed that the increasing pressure that defined benefit pensions were coming under had led to a majority of companies closing their schemes to new members.

It added it had also observed a growing trend for pensions to be closed to existing members as well, with people instead offered less generous defined contribution schemes, under which the individual shoulders the risk of investment volatility and increased life expectancy, or hybrid schemes under which the risk is shared.

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