DB pension deficits against long-term funding targets decline by £2bn

The deficits of defined benefit (DB) pension schemes decreased by around £2bn against long-term funding targets to £54bn in July, XPS Pensions’ DB:UK funding tracker has shown.

According to the tracker, assets stood at £1,685bn and liabilities were £1,739bn, as at 28 July 2022, and the aggregate funding level on a long-term target basis was 97 per cent.

XPS estimated that the average pension scheme would need an additional £5,000 per member to ensure they can pay their pensions in the long term.

Inflation was found to be continuing to have large impact on scheme liabilities, although a slight fall in long-term inflation expectations contributed to a marginal improvement in funding levels over July, despite a small decline in gilt yields.

XPS noted that the latest increase added to the improvements in long-term positions that have been seen during 2022, estimating that cumulative improvements were now in excess of £270bn.

Furthermore, growth assets received a “small boost” at the end of July amid reports that the Federal Reserve would keep an ‘open mind’ on increasing interest rates in September.

“Whilst July has seen pension scheme liabilities stay fairly flat compared to recent months, hedging strategies continue to be under stress,” commented XPS Pensions Group senior investment consultant, Felix Currell.

“Many schemes that use leveraged liability-driven investment products have been required to post significant collateral, bringing forward the need for trustees to consider the liquidity position of their schemes.

“The threat of global recession still looms over growth markets, however it was interesting to see the positive response in US equities in particular following the Fed’s announcements.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Global sustainable credit
Laura Blows speaks to Royal London Asset Management senior fund manager, Rachid Semaoune, about global sustainable credit
Global equities and transition investing
Pensions Age editor, Laura Blows speaks to Royal London Asset Management equity investment director, Jonathan Price, about transitioning to sustainable investments within global equities

Advertisement Advertisement