The deficit of UK defined benefit pension schemes decreased by £50bn in September to £290bn, according to PwC’s latest Skyval Index.

The fall in deficit was attributed to improved gilt yields and a slight fall in inflation expectations, although PwC warned that the current low gilt yields will continue to negatively affect poorly hedged schemes.

In its latest monthly update, PwC found that the assets of the UK’s 5,450 corporate DB pension funds increased by £10bn in September to £1,740bn.

Liabilities also fell, to £2,030bn, a decline of £40bn from the end of August.

The reduced deficit comes after a £100bn increase in August, which brought the deficit to its highest level since the beginning of 2018.

Commenting on the update, PwC chief actuary, Steven Dicker, said: “There has been an improvement in the assessed deficit over the month due to a small rally in gilt yields combined with a slight fall in inflation expectations.

“However, gilt yields remain at historic lows and poorly hedged schemes will continue to feel the brunt of this volatility.”

PwC’s Skyval Index, based on the Skyval platform used by pension funds, provides an aggregate health check of the UK’s c.5,450 corporate DB pension funds.

The current Skyval Index figures are based on the 'gilts plus' method, widely used by scheme actuaries.

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