The aggregate surplus of defined benefit (DB) pension schemes in the Pension Protection Fund’s (PPF) 7800 Index rose by £5.9bn to £265.6bn in January, continuing to set record levels.

The latest update to the index, which reflected the scheme valuation data submitted to The Pensions Regulator as part of the schemes’ annual returns, showed the overall funding ratio increased to 131 per cent, up from 130.2 per cent in December, reflecting higher asset values and falling liabilities.

Total scheme assets increased marginally over the month to £1.123trn, while total liabilities fell by £3.4bn to £857.5bn on a section 179 (s179) basis.

Meanwhile, the total scheme deficit fell slightly to £18.4bn, down from £18.9bn the previous month.

While the number of schemes in the PPF universe remained unchanged at 4,838, the proportion of schemes in deficit continued to fall, with 991 schemes - or 20.5 per cent of the total - in deficit at the end of January, compared with 24.9 per cent a year earlier.

Around 79.5 per cent of schemes are now in surplus.

On a year-on-year basis, the aggregate funding position has improved significantly, rising by £26.6bn since January 2025, when the surplus stood at £239bn.

Over the same period, the funding ratio increased by four percentage points from 127 per cent to 131 per cent.

The PPF said equity markets and gilt yields were the main drivers of funding movements during January.

Indeed, UK equity markets performed strongly, with the FTSE All-Share Total Return Index rising by 3.1 per cent in January, while the FTSE All-World ex-UK index increased by 0.9 per cent.

Gilt yields also rose modestly over the month, contributing to a reduction in liabilities.

Fifteen-year fixed-interest gilt yields increased by six basis points, while 20-year yields rose by seven basis points.

However, the PPF noted that s179 liabilities remained sensitive to changes in gilt yields and continued to unwind over time as schemes approached benefit payment dates.

The index figures continue to make no allowance for indexation on pre-1997 pension accrual, following the government’s Autumn Statement announcement that it intended to legislate to allow the PPF to pay prospective indexation from 2027.

The PPF added that it would update the index once legislation was finalised, noting that previous estimates suggested such a change could increase s179 liabilities by just under 12 per cent, based on illustrative assumptions.

PPF chief actuary, Shalin Bhagwan, said: "The funding position of the PPF-eligible universe saw little change over the course of December 2025 as, overall, global equity markets experienced a fairly flat month and yields on long-dated gilts rose marginally.

"Though small, the changes seen were positive, with the estimated aggregate funding position increasing by £2.1bn to £259.7bn and the funding ratio rising by 0.3 percentage points to 130.2 per cent.

"However, when stepping back and considering the position of the PPF-eligible universe over the course of the last year - the funding ratio in December 2024 stood at 125.7 per cent, 4.5 percentage points lower than it is today - there has been a clear strengthening of aggregate funding."

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