Aon Consulting, who last year warned that FTSE-100 companies faced a pensions black hole of £65 billion, said that this could be reduced by more than a third by the end of this year if the FTSE-100 continues to rise and the yield on corporate bonds also improves.

The firm said that the deficit would be cut to £40 billion if the FTSE (now around 4450) ended the year at 4725 and the yields on bonds edged up to 5.9 per cent.

Aon’s Paul McGlone told The Guardian: “Our retrospective analysis of the investment banks consensus forecasts indicates that the FTSE is continuing to rise at a rate quite close to that predicted in 2003.

“This, coupled with an overall increase in bond yields, bodes well for pension schemes and we would remain cautiously optimistic that FTSE-100 pension deficits could be wiped out by the end of 2004.”

A report last month by consulting firm Hewitt Bacon & Woodrow said deficits had already been halved following improvements in the markets.