The aggregate surplus of defined benefit (DB) pension schemes in the UK on a long-term targets basis remained unchanged at approximately £176bn in August, according to analysis from XPS Group.

At the end of the month, DB scheme assets totalled £1,462bn and liabilities stood at £1,286bn.

The aggregate DB scheme funding level continued to be “extremely positive” at 114 per cent of the long-term value of liabilities.

During August, aggregate scheme assets decreased slightly. Following a sharp decline in equity markets during the first week of the month, assets gradually recovered throughout the rest of August.

Meanwhile, aggregate scheme liabilities also fell slightly, which XPS stated was driven by a reduction in future inflation expectations.

Commenting on the update, XPS Group senior consultant, Henry Shore, said: “Despite investment market volatility over the month, aggregate pension scheme surpluses have remained stable and continue to be at record levels.

“On the 29th of July 2024, the final draft of The Pension Regulator’s new DB Funding Code was presented in parliament, providing trustees and sponsors with greater clarity on how the new Funding and Investment Strategy Regulations will be implemented.

“With many DB pension schemes now fully funded on or above their long-term funding basis, the new funding code provides clearer guidance on how schemes can strategically invest surplus assets in excess of their long-term objectives.

“These options include greater freedom to invest in growth assets, which may support trustee plans to provide future discretionary benefits, or any sponsor plans to utilise surplus assets elsewhere in their business.”

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