PPF 7800 Index deficit more than halves over February

The PPF 7800 Index deficit dropped from £23.1bn to £8.6bn over February, a decrease of £14.5bn, the Pension Protection Fund has revealed.

The position has improved from a year ago, when a deficit of £72.1bn was recorded at the end of February 2018. The funding level of schemes in the index now stands at 99.5 per cent, rising from 98.6 per cent in January 2019. It is also higher than the 95.6 per cent recorded in February 2018.

Within the Index, total scheme assets amounted to £1,602.9bn at the end of February 2019. Total scheme assets were unchanged over the month and increased by 2.3 per cent over the year. Total scheme liabilities were £1,611.5bn at the end of February 2019, a decrease of 0.9 per cent over the month and a decrease of 1.7 per cent over the year.

The aggregate deficit of all schemes in deficit at the end of February 2019 is estimated to have decreased to £154.3bn from £163.8bn at the end of January 2019. At the end of February 2018, the equivalent figure was £187.6bn.

At the end of February 2019, the total surplus of schemes in surplus increased to £145.6bn from £140.7bn at the end of January 2019. At the end of February 2018, the total surplus of all schemes in surplus stood at £115.5bn.

The number of schemes in deficit at the end of February 2019 decreased to 3,117, representing 57.2 per cent of the total 5,450 defined benefit schemes. There were 3,190 schemes in deficit at the end of January 2019 (58.5 per cent) and 3,608 schemes in deficit at the end of February 2018 (64.6 per cent).

The number of schemes in surplus increased to 2,333 at the end of February 2019 (42.8 per cent of schemes) from 2,260 at the end of January 2019 (41.5 per cent). There were 1,980 schemes in surplus at the end of February 2018 (35.4 per cent).

BlackRock head of UK strategic clients, Andy Tunningley, explained: “Over February, pension plan funding levels rose by 0.9 per cent as government bond yields moved higher resulting in a fall in liabilities. While risk assets continued to bounce back following last quarter’s sharp declines, gains in equity markets were offset by gilt yield rises and spread widening. With this increase, the PPF funding level for the average pension scheme is once more close to surplus following December’s sudden fall back into the red.”

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