UK DB pension deficit rises by £2.1bn amid Covid-19 second wave

The combined deficit of UK defined benefit (DB) pension schemes in the Pension Protection Fund (PPF) 7800 Index rose to £168.2bn at the end of October, marking a £2.1bn increase during the month.

The funding level also decreased from 91.4 per cent at the end of September to 91.2 per cent.

Total scheme assets declined by 1 per cent over the month to £1753.4bn, marking a 2.9 per cent fall since the start of the year.

This was partially offset by a 0.8 per cent decrease in total scheme liabilities over the month to £1,921.6bn, although this represents a 8 per cent increase over the year so far.

PPF chief finance officer and chief actuary, Lisa McCrory, explained: “The drop was caused by a decrease in asset values due to a fall in bond and equity prices, the movement in bond yields also caused liability values to fall.

“We remain mindful that global market movements continue to be volatile in the second wave of Covid-19.”

The number of schemes in deficit also rose in October, with 3,617 schemes in the index now in deficit, representing 66.7 per cent of the 5,422 DB schemes.

However, the total deficit for schemes in deficit has dropped slightly from £279.6bn as of September 2020, to £279.5bn at the end of October.

Commenting on the findings, Buck head of retirement consulting, Vishal Makkar, warned that the outlook for pension schemes "remains shaky".

He stated: “The aggregate deficit increased again during October, as markets continued to be plagued by the global pandemic and the reintroduction of lockdowns across Europe, as well as political turmoil in the United States.

"In the UK, a return to lockdown for many and the continuation of rock bottom interest rates mean that the outlook for pension schemes remains shaky.

“For now, a surge in unemployment and company collapses has been held at bay thanks to various government initiatives."

He added: "The Treasury has, however, clearly signalled that these will not be available forever and the threat of company collapses in particular, should be of major concern to trustees of poorly funded schemes.

"The PPF has never been prepared for mass scheme failures and hopefully such a disastrous occurrence will never arise.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Global equities and transition investing
Pensions Age editor, Laura Blows speaks to Royal London Asset Management equity investment director, Jonathan Price, about transitioning to sustainable investments within global equities
Cost transparency
Pensions Age editor, Laura Blows, discusses investment cost transparency and savings with Aon’s Neil Smith and Chris Hawksworth. Please click here for an edited write-up of the video

Advertisement Advertisement Advertisement