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DB pension surplus increased to £176.4bn in March

written by Bella Palmer
pension

As at 31 March, the funding ratio stood at 111.4 per cent, its highest level since June 2007, up from 108.4 per cent at the end of February

The aggregate surplus of UK defined benefit (DB) pension schemes increased by £42.8bn to £176.4bn in March, the Pension Protection Fund (PPF) 7800 Index has revealed.

As at 31 March, the funding ratio stood at 111.4 per cent, its highest level since June 2007, up from 108.4 per cent at the end of February.

The increase in funding levels was attributed to an increase in bond yields.

Total assets of the 5,215 schemes in the index decreased over the month, from £1,732.2bn to £1,721.5bn.

However, this was more than offset by liabilities falling from £1,598.6bn to £1,545.1bn over the same period.

There were 3,307 schemes in surplus and 1,908 in deficit at the end of March.

The aggregate deficit of the schemes in deficit was £62.9bn, down from £83.1bn at the end of February.

Commenting on the update, PPF chief finance officer and chief actuary, Lisa McCrory, said: Last month the aggregated funding ratio for the universe of schemes we protect increased to 111.4 per cent, the highest it’s been since June 2007.

Scheme funding levels continue to be impacted by the increase in bond yields which have moved to reflect expectations that the Bank of England’s policy rate will be higher in the coming years than it has for the previous decade, she said.

Buck UK head of retirement consulting, Vishal Makkar, added: Funding levels for the schemes in the PPF Index improved over the course of March, as total liabilities fell sharply. With more than 3,300 of the 5,215 schemes in the PPF Index ending the month in a funding surplus, the thoughts of many trustees may turn towards other goals.

He said: The recent Spring Statement offered no major shake-up for pension schemes, with nothing new in terms of requirements or regulation for trustees to contend with.

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