DB schemes’ surplus rises by £17bn in January

This meant the surplus rose to £146.4bn at the end of January from £129.3bn in December.

Section 179 liabilities, the level of assets needed to secure PPF-level benefits with an insurer, were 109.1 per cent funded in January, up from 107.7 per cent in the previous month.

By the end of January, total assets in DB schemes stood at £1.76tn, while total liabilities were £1.61tn. There were 2,094 schemes in deficit and 3,121 schemes in surplus, the PPF stated.

The aggregate shortfall of the schemes in deficit at the end of January was £81bn, down from £97bn in the previous month.

Lisa McCrory, the PPF’s chief finance officer and chief actuary, said: “Despite last month’s fall in global equities, the ongoing rise in bond yields saw the aggregate surplus of the 5,215 schemes we protect increase by £17.1bn to £146.4bn.

“This improvement in scheme funding saw fewer schemes in deficit, with a reduced aggregate deficit of £80.9bn — a positive trend, which scheme trustees will undoubtedly welcome as they consider their longer-term plans.”

Vishal Makkar, head of retirement consulting at Buck, noted: “The stage could be set for further falls in liability values this year, following the recent decision from the Bank of England to raise the base rate by 0.25 per cent.

“The latest move from the [central] bank has already prompted gilt yields to increase, and there could well be further base rate rises on the horizon.”

He added: “Four of the bank’s nine Monetary Policy Committee members reportedly wanted to raise rates to 0.75 per cent in February, and the committee may yet vote to do so when it meets again in the middle of March.

“Trustees and scheme sponsors will need to ensure their planning accounts for a higher-rate environment, as well as the potential for ongoing inflationary pressure.”