Aggregate DB pension surplus rises to nearly £100bn

The aggregate surplus of the UK’s defined benefit (DB) pension schemes increased by £4.4bn to £99bn on a section 179 basis in June, according to the Pension Protection Fund (PPF).

This represents the fifth consecutive month that the aggregate surplus has risen since the PPF 7800 Index reported a surplus for the first time in nearly two years in February.

The funding ratio of the 5,318 schemes in the index also increased, from 105.6 per cent at the end of May to 105.8 per cent at the end of June.

Total assets were £1,813bn, up from £1,788.3bn, while liabilities increased from £1,693.7bn to £1,714bn.

According to the PPF, there were 2,424 schemes in deficit at the end of June and 2,894 in surplus.

The aggregate deficit of schemes in deficit fell by £0.1bn to £117.7bn during the month, while the aggregate surplus of schemes in surplus rose by £4.3bn to £216.7bn.

Commenting on the figures, PPF chief finance officer and chief actuary, Lisa McCrory, said: “There’s been very little change in the funding position in June, with the funding ratio increasing by 0.2 percentage points to 105.8 per cent, due to an increase in the value of global equities.

“2,424 of the 5,318 UK defined benefit pension schemes are currently in deficit, although the total shortfall fell slightly from £117.8bn to £117.7bn, meaning the total risk we’re currently exposed to is broadly unchanged.”

Buck head of retirement consulting, Vishal Makkar, added: “The aggregate position of the schemes in the PPF Index remained in surplus during June, a clear contrast to the £174.8bn deficit they faced this time last year. The improvement in funding positions reflects both the changes in the PPF’s actuarial assumptions as well as the more positive economic outlook for the country, which has followed the rollout of the UK’s vaccine programme.
 
“There is, however, still a great deal of uncertainty for scheme sponsors and particularly those in industries such as travel, hospitality and the charity sector. The outlook for both sponsors and members in these industries could well worsen again if coronavirus cases continue to rise in the UK, leading to a return to any lockdown measures.”

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