DB pension surplus rises to £53.7bn

The aggregate surplus of the UK's defined benefit (DB) pension schemes increased by £19.5bn over April to reach £53.7bn at the end of the month, the Pension Protection Fund (PPF) has revealed.

This marks a £138.2bn funding swing in comparison to April 2020, when a deficit of £84.5bn was registered.

The PPF 7800 index found that the funding ratio increased from 102 per cent at the end of March 2021 to 103.1 per cent.

The pensions lifeboat identified an increase in the value of equities as the primary driver for the increase in aggregate funding.

Assets rose by £27bn during the month to £1,784bn, while liabilities increased by £7.5bn to £1,731bn.

The number of schemes in deficit declined from 2,730 to 2,633 in April, while the number of schemes in surplus increased from 2,588 to 2,696.

This is only the second time the index has registered more schemes in surplus than in deficit.

The total deficit of schemes in deficit fell from £144.3bn to £135.8bn, while the total surplus for schemes in surplus increased from £178.5bn to £189.5bn.

Commenting on the findings, PPF chief finance officer and chief actuary, Lisa McCrory, said: “The funding position of our PPF 7800 Index has seen a small improvement in April, with the surplus of the 5,318 schemes increasing by nearly £20bn. This is primarily due to an increase in the value of equities.

"For only the second time in the index’s 15 year history there are now more schemes in surplus than in deficit.
“The 7800 Index will be updated next month to take account of the recently released A10 s179 assumptions, which is anticipated to improve the funding position further. Despite these positive signs of recovery, we remain cautious in this challenging environment.”

The PPF estimates DB schemes’ funding position on a section 179 basis.

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