Defined benefit (DB) pension scheme funding remained at a similar level month-on-month at the end of May, despite volatility, with modelled schemes having contrasting movements, according to Broadstone’s latest Sirius Index.

The index measures how various scheme strategies are performing on their paths to low dependency through tracking a growth-focused model scheme and more conservative matching-focused model scheme.

In May, the growth-focused investment strategy saw its funding level on a low dependency basis increase by 0.5 percentage points to 92.2 per cent.

The scheme experienced funding volatility during the month, with a 1.7 per cent difference between the maximum and minimum funding levels seen in May.

Meanwhile, the funding level of the matching-focused scheme fell by 0.3 percentage points to 89.4 per cent over the month.

It saw less volatility during May, with the difference in the maximum and minimum funding level being 0.9 per cent.

“Pension schemes largely held their funding positions throughout May,” said Broadstone head of trustee services, Chris Rice.

“The higher growth asset exposure performed better but this was accompanied by funding level volatility.

“This is all well and good when growth assets are performing well. In the face of global political and economic uncertainty, however, this could quickly reverse and trustees should consider whether their employer covenant supports this exposure.

“It also raises the questions of surplus erosion if conditions reverse with surplus maintenance becoming an increasingly important challenge for trustees.”

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