The UK's defined benefit (DB) pension schemes have improved their estimated funding positions by £9.2bn, to a deficit of £179.3bn at end-May 2009 according to the Pension Protection Fund's (PPF) latest PPF7800 index.

The total deficit of all schemes which themselves are in deficit in May 2009 has improved from £204.8bn to £196.8bn. In May 2008 this figure stood at £45.0bn.

There was also an improvement in the total surpluses of all schemes in surplus, from £16.4bn at the end of April 2009 to £17.5bn at the end of May 2009. Scheme liabilities dropped by 0.3 per cent over the month, from a previous £960.7bn in April 2009. Assets across the sample of schemes also increased by 0.9 per cent due to rising equities.

Watson Wyatt commented that although assets have increased over the month, they are still down by nine per cent over the year and that the latest PPF numbers shows how schemes have paid a heavy price for not acting fast enough to changing conditions.

Rash Bhabra, head of corporate consulting at Watson Wyatt, explained: "The last year shows how quickly opportunities can disappear if pension schemes do not act quickly to lock in favourable funding positions when they have the chance. If markets remain volatile, it will pay to have a plan for selling risky assets that can be executed as soon as the time is right."

Bhabra also said that the index backed up the financial consultant's belief that more employers would close their DB schemes to existing members over the next few months.

- Pensions Age June 2009

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