FTSE350 defined benefit (DB) pension scheme sponsors could unlock £47bn of economic value via surplus refunds, following an increase in the estimated aggregate surplus, analysis from Barnett Waddingham has found.

Barnett Waddingham's DB End Gauge analysis found that the estimated low dependency surplus in the FTSE350 schemes was £63bn in December, up from £60bn in November.

If refunded in full, this would result in around £47bn being paid to the FTSE350 companies and £16bn being paid to HMRC in tax.

According to the index, the aggregate surplus increased in the last half of 2024, from £45bn at 31 May 2024 to £63bn at 31 December 2024, primarily due to the increase in bond yields reducing DB scheme liability values.

The index also highlighted further improvements in the journey to buyout, as the average time to buyout fell to 4.6 years, as of 31 December 2024.

Barnett Waddingham principal, Lewys Curteis, highlighted the analysis as illustration of the "robust" position of the UK’s FTSE350 DB pension schemes, with the increase in bond yields towards the end of the year further strengthening funding levels.

“While the recent movements in bond markets will generally have been positive for DB scheme funding positions, companies and trustees should remain vigilant to the impact of this volatility," he continued.

"Action may be needed to ensure investment strategies remain appropriate and opportunities to reduce risk are captured.

"Depending on the extent of any funding level gain, sponsors may be in a position to renegotiate cash contributions or accelerate plans for an insurance or superfund transaction.”

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