The UK defined benefit (DB) pension deficit fell by £40bn in August to £230bn, PwC’s latest Skyval Index has revealed.

The decrease was driven by a £60bn drop in liabilities, which declined from £2,050bn to £1,990bn.

This was partially offset by assets declining by £20bn over the month, from £1,780bn to £1,760bn.

“Gilt yields have increased over the month, which has resulted in a modest reduction in pension liability values at the end of August,” commented PwC chief actuary, Steven Dicker.

“While this meant a slight fall in the value of government bonds, there was also a small rise in equity markets. Overall, pension scheme deficits reduced by £40bn.”

The deficit at the end of August was the lowest recorded on the index since April 2020 but is still £60bn higher than at the end of December 2019.

“The economic journey out of the pandemic remains uncertain,” Dicker added.

“Refreshing strategy and keeping focus on effective risk management remains key for both scheme sponsors and trustees, so that they remain in the best shape possible to capture opportunities and ensure scheme members benefits are delivered in full.”

The index provides an aggregate heath check of the over 5,000 DB schemes in the UK, with its figures based on the ‘gilts plus’ method.

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