DB schemes’ surplus rises £5.2bn in December

This meant that the surplus improved to £376.7bn at the end of last month from £371.5bn in November.

Section 179 liabilities, the level of assets needed to secure PPF-level benefits with an insurer, were 136.5 per cent funded in December, up from 133.7 per cent in the previous month.

By the end of December, total assets in DB schemes stood at £1.41tn, while total liabilities were £1tn. There were 686 schemes in deficit and 4,445 schemes in surplus, the PPF stated.

The aggregate shortfall of the schemes in deficit at the end of December was £4.5bn, down from £5.8bn in the previous month.

PPF chief finance officer and chief actuary Lisa McCrory noted that the “primary driver of the increase in estimated surplus was the rise in government bond yields through December, which meant that the estimated value of liabilities fell by £68.5bn”.

“Bond yields rose in December as central banks, particularly in the US and the eurozone, reiterated that policy rates are likely to remain at higher levels for some time.

“In addition, the Bank of England sold £15bn of the holdings that they had bought in the market intervention in September/October, representing a material increase in supply.”

Broadstone senior actuarial director Jaime Norman explained the figures show that “many thousands more schemes will be closer to the end game than last year or than they could possibly have planned for at this point”.

He added: “2023 looks set to be a red hot year for the insurance market and we expect to see significant transaction volumes throughout the year.”