On the go: The overall funding position of UK defined benefit schemes improved in September, according to figures released by the Pension Protection Fund on Tuesday.
The aggregate funding level of schemes in the PPF 7800 Index was up 0.7 percentage points from July 2019.
The figures offer some good news for the 5,450 schemes in the index, which saw their aggregate deficit fall to £149bn, from a shortfall of £162.9bn at the end of August.
The overall funding level improved from 91.5 per cent at the end of August, to 92.2 per cent.
The total shortfall of schemes in deficit fell to £265.3bn over the month, from £273.5bn.
Total assets ended September at £1.76tn, while liabilities totalled £1.91tn.
According to Vishal Makkar, head of retirement consulting at Buck, while the index shows that deficits have fallen, the fall in gilt yields to twenty-year lows has placed pressure on DB schemes.
He said: “Our own analysis found that the value of aggregate funding liabilities for UK DB pension schemes increased by around £5bn over September.
“This is on the back of liability values increasing for most of the summer.”
He also warned that gilt yields are not the only factor fueling deficits.
He said: “A combination of political uncertainty in the UK, ongoing negotiations with the European Union and volatility in the global oil markets have added to continued instability in the wider market.
“The Chancellor’s recent statement about the future of the retail price index and the possible longer-term move to the consumer price index including owner-occupiers’ housing costs has added further uncertainty to funding discussions.”
