The end of quantitative easing and a sustained rise in interest rates over the next few years could wipe out the deficits of most pension schemes and encourage them to invest in equities again, according to research from PricewaterhouseCoopers, Goldman Sachs and Mercer.

Mercer, a consultancy that advises pension schemes on their investments, said this morning that the 9% rise in UK 10-year gilt yields during June, coupled with a similar rise in high-quality corporate bond yields, had improved UK pension funds' finances by £16bn.