It is now "more important than ever" for trustees and sponsors to review their long-term strategy, XPS Pensions has said, after its analysis revealed that the aggregate surplus of the UK's defined benefit (DB) pension schemes rose from £151bn to £178bn in April.

According to the XPS tracker, UK pension schemes’ funding positions rose by £19bn over April 2024, relative to long-term funding targets, while the aggregate funding level on a long-term target basis remained "extremely positive", at 114 per cent of the long-term value of liabilities.

XPS explained that whilst a rise in long-term gilt yields of 0.4 per cent led to a decrease in the value of liabilities, increasing scheme funding levels, this was offset by a fall in aggregate scheme assets, driven by schemes’ hedging strategies, as well as slight increases to long-term inflation expectations increasing liability values.

These continued improvements are also in line with the findings from The Pensions Regulator's recent Funding Statement, which found that half of DB schemes have exceeded their estimated buyout funding levels.

Commenting on the findings, XPS Pensions Group partner, Danny Vassiliades, said: “With high interest rates reducing scheme liabilities, aggregate pension scheme surpluses continue to approach record levels.

“With a new funding code due to come into force from September 2024, it is now more important than ever for trustees and sponsors to take a step back and assess what the right strategy path is for their scheme.”

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