The accounting deficit of FTSE 350 companies’ defined benefit (DB) schemes rose from £73bn at the end of September 2020 to £75bn on 30 October, according to Mercer.

The provider’s Pensions Risk Survey data showed that liability values declined from £877bn to £871bn during the period, while asset values fell from £804bn to £796bn.

Mercer chief actuary, Charles Cowling, said: “Covid-19 storm clouds are gathering again as markets prepare for a second wave of coronavirus, and the impact wide ranging lockdowns will have on global economic growth.

“In the UK, the latest data from the Office of National Statistics reveals that the economy is growing slower than forecast, remaining at 9.2 per cent below its pre-pandemic peak.”

He added that there had been “mixed messages from the Bank of England on interest rates” as the outlook for the economy weakened, noting that the central bank had hinted that “another round of quantitative easing may be imminent” and acknowledged that that time was not right for negative interest rates to be introduced.

Mr Cowling concluded: “Finally, various political uncertainties caused by the forthcoming US Presidential Election and Brexit negotiations, indicate further risk for pension trustees at a time when many employers are facing challenges and covenants are under big pressure.

“Trustees are therefore urged to monitor their situation wisely and seek opportunities to reduce risk where possible.”

Mercer’s survey data relates to around 50 per cent of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their end of year accounts.

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