The aggregate surplus of UK defined benefit (DB) pension schemes increased by £25.6bn to £108.8bn as of the end of September 2021, according to the Pension Protection Fund (PPF) 7800 Index.

The funding ratio of the 5,318 schemes in the index also increased from 104.7 per cent at the end of August 2021 to 106.4 per cent at the end of September 2021, its highest level since October 2007.

This was primarily as a result of rising gilt yields, which saw total assets fall to £1,800.9bn and total liabilities fall to £1,692.1bn, compared to £1,856.3bn and £1,773.1bn in August, respectively.

In addition to this,100 fewer schemes were in deficit, with a total of 2,383 schemes in deficit in September compared to 2,483 schemes in August.

The aggregate deficit of the schemes in deficit at the end of September also declined over the month to £109.4bn, down from £130.2bn.

This represents the second consecutive month of improved funding levels in the PPF index since a £36.6bn fall was recorded in July, with a more than £20bn increase also seen in the aggregate surplus in August.

Commenting on the figures, PPF chief finance officer and chief actuary, Lisa McCrory, said that it "has been another positive month for pension scheme funding".

“The improving position was mainly as a result of rising gilt yields which caused both assets and liability values to fall," she continued.

“The continued volatility of gilt yields along with rising inflation acts as a reminder to trustees of how quickly scheme funding can change and the need to keep their investment and risk mitigation strategies under review.”

Share Story: