The aggregate deficit of the 5,588 schemes in the PPF 7800 Index has risen by over £10bn to the end of May 2018.

According to the Pension Protection Fund's most recent update, the aggregate deficit rose to £94bn at the end of May from £81.7bn at the end of April 2018. While improvement has slowed, the deficit position has improved from a year ago, where a deficit of £167.9bn was recorded at the end of May 2017.

As at 31 May 2018, total assets were £1,611.2bn and total liabilities were £1,705.2bn.

In addition, the funding level decreased slightly from 95.1 per cent at the end of April to 94.5 per cent in May. Nonetheless, the funding level is higher year-on-year, up from 90.3 per cent recorded in May 2017. Equity markets and gilt yields were the main drivers of funding levels, the index noted.

Moreover, at the end of the month, there were 3,659 schemes in deficit and 1,929 schemes in surplus. The aggregate deficit of all schemes in deficit at the end of May 2018 rose to £206.4bn from £194.9bn the previous month.

The total surplus of schemes in surplus at the end of May fell to £112.3bn from £113.2bn at the end of April 2018.

The PPF’s update provides estimated funding positions on a section 179 basis for the defined benefit pension schemes that are potentially eligible for entry to the lifeboat fund.

Commenting on the figures, BlackRock head of UK strategic clients Andrew Tunningley said: "It was the proverbial “game of two halves” for markets in May, as growth assets continued to rally and bond yields rose for the first couple of weeks, before giving all these gains back in the last 10 days. Political turmoil in Italy, US tariff announcements on metal imports, and ongoing trade tensions between the US and China resulted in a sell-off in markets towards the end of the month.

"“We expect markets to remain volatile, and pension schemes should ensure they have a balanced squad of assets to tackle the challenges ahead. While we expect bond yields to bounce back and rise further over the rest of 2018 and beyond, schemes can’t rely on this to win (funding level percentage) points. Protecting against surprise falls in yields is key and appropriate defence in the form of LDI strategies remains important. Even in this rising rate environment, the 2071 conventional gilt syndication mid-month attracted record demand, being 6.5 times oversubscribed, providing further evidence that gilt yields remain anchored at the ultra-long end."

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