In 2015/16, the voluntary sector had total liabilities of £19.2bn
- In 2015/16, the voluntary sector had total liabilities of £19.2bn, an increase of £1.2bn since 2014/15.
- Half of the sector’s liabilities (49%) are long-term liabilities, including creditors, pension liabilities and provisions.
- In 2015/16 the voluntary sector had a net pension deficit of £2.0bn.
Liabilities have been increasing since 2012/13 but haven’t reached the peak level of 2011/12
- The voluntary sector’s liabilities have been increasing since 2012/13, with most of the increase occurring between 2013/14 and 2015/16.
- Liabilities have not yet returned to the level they were at in 2011/12.
- Over time, short-term liabilities have followed the same trend as total liabilities.
Over the last six years, the sector’s net pension deficit has increased
Over the last six years, the sector’s net pension deficit has increased from £1.5bn in 2010/11 to £2.0bn in 2014/15 and 2015/16. The trend of increasing pension deficits is not limited to the voluntary sector and is driven by several factors:
- An increasing life expectancy overall means that pension funds will need to pay out pensions for longer and see their liabilities grow.
- At the same time, pension assets have not grown as fast in recent years, due to challenging capital market conditions (particularly low interest rates). Therefore, pension liabilities have grown much faster than assets and pension deficits have increased.
Large organisations are more likely to have longer-term liabilities
- Almost two-thirds (59%) of the super-major organisations’ liabilities are long-term liabilities. This proportion decreases with the size of the organisation, to 44% for major organisations, 39% for large organisations and 34% for medium-sized organisations.
- In 2015/16, creditors due after one year represented 52% of small and micro charities’ liabilities. This is mostly due to a few outliers in our sample.
- As large organisations are more likely to have longer-term liabilities, the largest organisations unsurprisingly carry the most pension liabilities: 82% (£1.6bn) of the sector’s pension liabilities are held by major and super-major charities (organisations with an income over £10m).
- Pension deficits make up less than 1% of the liabilities of small and micro organisations, as these tend to be volunteer-led organisations with no, or only a small, paid workforce.