In a reversal of the trend over recent months, the aggregate deficit of the 6,533 schemes in the Pension Protection Fund’s (PPF) eligible universe narrowed over the month of June.

According to the PPF’s latest 7800 index, the deficit of schemes in the PPF’s eligible universe fell to £8.3 billion at the end of June, down from £13.5 billion at the end of May.

The schemes’ assets as a percentage of s179 liabilities rose this month from 98.7 per cent to 99.2 per cent. Furthermore, the funding ratio is higher than the 95.9 per cent recorded in June 2010.

The PPF stresses that the year-on-year figure is impacted by changes to the assumptions for s179 valuations which took effect from April. The change lifted liabilities by 3.6 per cent and reduced the aggregate balance by £34.9 billion.

Within the index, total scheme assets amounted to £1,004 billion at the end of June, only a slight change over the month. Over the year there was an increase of 12.5 per cent. Total scheme liabilities were £1,012.3 billion at the end of June, a decrease of 0.6 per cent over the month and an increase of 8.7 per cent over the year.

The aggregate deficit of all schemes in deficit at the end of June was estimated at £77.6 billion, down from £80.8 billion at the end of May 2011. At the end of June 2010, the equivalent figure was £91.4 billion.

Of the schemes in surplus, the total surplus increased to £69.3 billion from £67.3 billion at the end of May. At the end of June last year, the total surplus of all schemes in surplus stood at £52.9 billion.

The number of schemes in deficit at the end of June decreased to 4,245, representing 65 per cent of the total 6,533 defined benefit schemes. There were 4,311 schemes in deficit at the end of May 2011 and 4,534 schemes in deficit at the end of June 2010.

The number of schemes in surplus increased at the end of June 2011 to 2,288, or 35 per cent of schemes, from 2,222 at the end of May 2011. There were 2,062 schemes in surplus at the end of June 2010.

In the report, the PPF said equity markets and gilt yields are the main drivers of funding levels. The FTSE All-Share Index fell by 0.8 per cent over June 2011 and 15-year gilt yields were up 13 basis points.

PPF said there was a slight decrease in assets during June, mainly due to declining UK equities and falling bond markets, with some offset from rising overseas equities. Liabilities also fell, by 0.6 per cent, due primarily to the rise in gilt yields.

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