The pension deficit of Britain's biggest 200 companies could leap to a record £110 billion in the next few months because the recent equity market bull run has not offset the massive deficits the 200 largest corporate pension funds suffered in the last two months said consultant Aon on Saturday.

The corporate pension deficit amounted to £72.8 billion at the end of July, slightly down from £73.3 billion the previous month, but up from £40.1 billion at the end of May.

Pension assets were hammered after equity markets plummeted at the outbreak of the financial crisis. At the same time pension funds' liabilities, which are calculated against bond yields, fell because yields were soaring. This gave a distorted picture of pension schemes' real funding position.

Soaring yields swung pension schemes' funding positions back to surplus in the depth of the market crash late last year, but that situation has reversed as the economy starts to show signs of recovery and bond yields fall, pushing pension liabilities up. Corporate pension scheme deficits could grow by another £40 billion to take them above the worst pension deficit level of £102 billion in March 2003.

Aon said equity markets could also go up, boost assets and ultimately improve funding positions, but Sarah Abraham, consultant and actuary at Aon Consulting, said corporate bond yields may go down before equities completely recover. "So there is a chance that deficits will rise again," she said. "If the corporate bond yields fall and equities keep bouncing around, then it could create problems," she said