European pension funds' deficit fell from €279bn ($344bn) in 2002 to €212bn at the end of last year, according to Dresdner Kleinwort Wasserstein. Equity market recovery has been the main contributor to the 23% improvement, but DrKW warned that the crisis is not yet over.

Pension fund deficits are the difference between the liability to employees minus the assets set aside to meet them. A report by the bank said the rise in assets was only half the story, with liabilities increasing by 3.2% year on year on the back of a falling discount rate. DrKW said the deficit fall could be temporary as the market might slide or trade sideways for years.