The deficit of UK defined benefit pension schemes decreased by £70bn in a volatile October to £220bn, according to PwC’s latest Skyval Index.

The fall in deficit was attributed to the ongoing volatility, both politically and economically, as funding levels fluctuated throughout the month.

In its latest monthly update, PwC found that the assets of the UK’s 5,450 corporate DB pension funds decreased by £20bn in October to £1,740bn.

However, this was offset by liabilities also falling, to £1,940bn, a decline of £90bn from the end of August.

The reduced deficit comes after a £50bn decline in September, after August saw the deficit at its highest level since the beginning of 2018 (£340bn).

Commenting on the update, PwC chief actuary, Steven Dicker, said: “Continuing political and economic uncertainty, both domestically and globally, means that funding levels on the ‘gilts plus‘ basis are likely to remain volatile.

“While hedging has helped stabilise many schemes, others remain significantly exposed. There is also the risk that traditional hedging strategies come under pressure due to leverage and liquidity constraints.

“These factors will further increase interest in cash flow driven approaches to investment and funding, especially for more mature schemes.”

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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