On the go: The aggregate funding level of defined benefit schemes improved by around £400bn in 2022, with many of these plans moving into a surplus for the first time, new research has shown.
Analysis by XPS Pensions showed DB scheme funding on a long-term target basis reached 104 per cent as of December 20, which represents an increase of just under 20 per cent in 2022.
During the year, gilt yields rose by 3 per cent, resulting in a 35 per cent reduction in the value of pension scheme liabilities. On the other hand, typical asset portfolios fell by around 20 per cent, XPS said.
XPS Pensions Group actuary Tom Birkin said: “From February’s shock Russian invasion of Ukraine to the gilt market meltdown in October, 2022 has been a year of seismic market movements – and the upshot for pension schemes is that most find themselves in a much healthier position than they were at the start of the year.
“With more schemes in surplus and insurer premiums now looking more affordable than ever, lots of schemes will be contemplating buyout to lock in the huge gains they have achieved during 2022.
“On the supply side, the UK bulk annuity market appears to be gearing up for a record year, with unprecedented demand from pension schemes seeking to secure the long-term future for their members.”
