The UK’s defined benefit (DB) deficit has increased by £40bn to £450bn at the end of November, according to new figures released by PwC’s Skyval Index.

The index, which provides an aggregate health check of the UK’s 5,800-odd DB funds, showed that the total assets held by DB schemes is £1,560bn, while their combined liability target was £2,010bn.

PwC’s chief actuary Steven Dicker, said: "Despite the increase in short-term interest rates by the Bank of England, long-term real interest rates, which are the main driver of the pension deficit number, moved slightly in the opposite direction. This resulted in a £60bn increase to liabilities over the month with assets growing modestly at £20bn, resulting in a net £40m increase in deficit.

"The economic drivers of long-term interest rates are complex and they are further impacted by supply and demand factors including quantitative easing, which leads to month to month swings in the deficit calculation using the ‘gilts plus’ approach."

In October, the DB deficit fell by £50bn, and according to PwC, the total DB deficit had been steadily falling from March, when it sat at £520bn, until August, when it spiked by £40bn.

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