The aggregate deficit of the PPF 7800 deficit rose by £29.2bn over the month in December 2016, it has been revealed.

The deficit, which was £194.7bn at the end of November 2016, ended the year at £223.9bn. This resulted in the funding ratio worsening from 88.1 per cent to 86.8 per cent.

Total assets of the 5,794 schemes in the index were £1,476.4bn and total liabilities were £1,700.3bn.

The number of schemes in deficit at the end of December 2016 increased to 4,339, representing 74.9 per cent of the total 5,794 defined benefit schemes. There were 4,272 schemes in deficit at the end of November 2016 (73.7 per cent) and 4,521 schemes in deficit at the end of December 2015 (76.0 per cent).

The number of schemes in surplus fell to 1,455 at the end of December 2016 (25.1 per cent of schemes) from 1,522 at the end of November 2016 (26.3 per cent). There were 1,424 schemes in surplus at the end of December 2015 (24.0 per cent).

Commenting on the results, BlackRock head of UK strategic clients Andy Tunningley described 2016 as like a “marathon on a treadmill” for pension schemes.

“Energy was spent, pain incurred, but the finish line looked upsettingly similar to the starting post. The PPF 7800's aggregate funding ratio yo-yoed all year - at the mercy of wildly fluctuating bond yields - and ended back near where it started. One step forward, one step backward was the story of pension fund deficits in 2016. The only schemes that avoided playing deficit hopscotch were those that had implemented LDI.

“As pension funds mature, the cost of making the wrong decision gets ever greater. Good investment decisions are built from strong risk management. This is especially important now as the UK economy faces an uncertain future. Pension schemes could be hit by the market pricing of liabilities and by the declining corporate health of their sponsors. This is why we believe many schemes should be hedging more, and expect continued pension de-risking activity to drive appetite for UK LDI strategies in 2017.

“Risk management alone is not enough, however. Deficits exist and need to be clawed back. Liability sympathetic secure income assets, that produce cashflows at higher yields than corporate bonds or gilts, allow pension schemes to both control funding level volatility and outperform their liabilities. Though no silver bullets exist to eradicate the pensions problem, we believe many pension funds can make more of these assets to improve their outcomes.”

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