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LONDON (Reuters) - The combined defined benefit, or final salary, pension deficits of FTSE 350 companies increased threefold last year, hit by a sharp drop in corporate bond yields, consultants Mercer said on Wednesday.
The accounting deficit of the schemes rose to 137 billion pounds at the end of December, 2016 from 39 billion pounds a year earlier, Mercer said in a statement.
Corporate bond yields fell by more than 100 basis points in 2016, increasing the liabilities on company balance sheets, which can affect firms' ability to pay dividends and crimp merger activity.
"Pension scheme trustees and sponsors face the new year with significant uncertainty," Le Roy van Zyl, a Mercer senior consultant, said, pointing to the impact of Britain's vote to leave the European Union, new leadership in the United States, as well as upcoming French presidential elections.
Reporting by Carolyn Cohn; editing by Simon Jessop