The aggregate surplus of the UK’s defined benefit (DB) pension schemes against long-term funding targets remained “extremely positive” in February, rising to around £154bn, analysis from XPS Pensions Group has revealed.

Based on assets of £1,420bn and liabilities of £1,266bn, the tracker showed that the aggregate funding level of UK pension schemes on a long-term target basis remained steady at 112 per cent of the long-term value of liabilities, as of 28 February 2024.

According to XPS, a 0.2 per cent rise in long-term gilt yields led to a decrease in the value of liabilities, increasing scheme funding levels, although this was partially offset by aggregate scheme assets decreasing, driven by schemes’ hedging strategies.

News of the continued DB funding improvements comes hot on the heels of thegovernment's latest DB consultation, which is looking at possible options to relax rules around DB surplus extraction, in an effort to improve member returns and support UK growth.

Commenting, XPS Pensions Group partner, Danny Vassiliades, said: “The fact that aggregate pension scheme surpluses increased last month and are at near-record levels* underlines the timeliness of the government’s consultation on models for surplus utilisation, first hinted at in the Chancellor’s 2023 Autumn Statement.

“Any role played by DB schemes in support of wider UK growth must not risk the hard-won security of members’ benefits.

"However, with many schemes are now showing considerable surpluses and with the government moving forward with its proposals, trustees and sponsors may wish to review their ultimate objectives in this context.”

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