The overall FTSE 350 defined benefit pension deficit declined by £3bn during November to £38bn, according to Mercer.

Its latest Pensions Risk Survey found that, as of 29 November, liability values had fallen by £1bn to £882bn, while asset values had increased by £2bn to £844bn.

Its data also revealed that corporate bond yields increased during the month, while inflation expectations fell.

Mercer advised trustees to continue to reduce pensions risk ahead of the General Election on 12 December, as political and economic uncertainty looks set to continue.

Commenting on the findings, Mercer partner, Charles Cowling, said: “The political turmoil in the UK is likely to last beyond the General Election, causing continued nervousness and volatility in markets.

"Though in the last month, markets have had reason to reflect some early Christmas cheer.

"Inflation has dipped to 1.5 per cent - largely as a result of fuel prices and changes to the energy price cap, and despite the lowest annual growth rate in a decade the UK did not fall into recession this year.

“This general weakness in the economy has prompted speculation that interest rates cuts are likely in 2020. The Bank of England believes leaving the EU could lead to slower economic growth than previously forecast.

“The good news for trustees is that the current market buoyancy provides opportunities to take pension risk off the table, possibly through the settlement of pension liabilities.

“Indeed, this will be a record year for the settlement of pension liabilities, with buy-out deals possibly set to break through £40bn – smashing the previous record of £24bn of transactions in 2018.

“With market volatility likely in 2020, trustees should be looking to reduce risk in pension schemes.”

Mercer’s data relates to about 50 per cent of all UK pension scheme liabilities and analyses pension deficits calculated using the approach companies have to adopt for their corporate accounts. The data underlying the survey is refreshed as companies report their year-end accounts.

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