On the go: The aggregate deficit of the 5,422 defined benefit schemes in the Pension Protection Fund 7800 Index fell by £59bn in August.
This meant the shortfall decreased to £140.5bn at the end of August from £199.5bn at the end of July.
Section 179 liabilities, the level of assets needed to secure PPF-level benefits with an insurer, were 92.6 per cent funded in August, up from 89.9 per cent in the previous month.
By the end of August, the total assets in DB schemes were £1.75tn, while total liabilities stood at £1.9tn. There were 3,506 schemes in deficit and 1,916 schemes in surplus, the PPF stated.
Vishal Makkar, head of retirement consulting at Buck in the UK, noted that despite a fall in the aggregate deficit this month, “caused by a sizeable increase in gilt yields over August, the general economic outlook has continued to worsen”.
He said: “With no definitive roadmap to follow and the UK economy now officially in recession — one of the deepest in Europe — most scheme trustees are very much at the mercy of the financial positions of their sponsors.
“Since the start of the year, Covid-19 has been the main factor driving instability worldwide and in the UK, but ultimately there is nothing that schemes can do about the impact of the virus on the economy,” Mr Makkar continued.
“Even as the UK continues to ‘open up’, certain sectors remain heavily reliant on government support. All scheme trustees, especially those in sectors affected severely by Covid-19, should be watching closely for any new developments in government policy and ensuring that their planning remains as flexible as possible to deal with these changes.”
