DB deficit shrinks over October
On the go: UK defined benefit schemes are edging closer to the funding needed to buy out the Pension Protection Fund-level benefits, according to an update from the lifeboat fund.
The 5,450 DB schemes in the UK ended October 94.4 per cent funded on the section 179 basis, up from 92.2 per cent at the end of September.
There is an aggregate deficit of £103.6bn across the PPF 7800 index, with assets of £1,739.7bn falling short of £1,843.3bn of liabilities.
Slight falls in equity markets and a rise in gilt yields dragged asset values down, but the same movement in long-term interest rates shrunk liabilities further.
The move is a significant rebound after a bumpy year for yields and funding levels. At the end of 2018, the UK’s DB schemes moved into aggregate surplus, but funding has steadily slipped over 2019.
While the nation is edging back towards this net surplus, variations in individual schemes’ funding levels mean the PPF is still exposed to risk.
There were 1,991 schemes in s179 surplus at the end of October, but 3,459 schemes in deficit with a total shortfall of £230.5bn. This figure was down from £265.3bn a month earlier.
Source: Pension Protection Fund