UK defined benefit (DB) pension scheme funding levels have continued to improve over three separate measures in April, with the aggregate surplus hitting £220bn on a low dependency basis, equivalent to a funding level of 124 per cent, according to PwC’s Pension Funding Index.

In the Buyout Index, the aggregate surplus increased to £165bn, equivalent to a funding level of 117 per cent.

Over April, the buyout surplus rose by £25bn, versus a £10bn increase on a low dependency basis, suggesting a shift in market dynamics as insurer pricing became more competitive, driven by excess capacity and increased competition from new entrants and ownership changes, PwC said.

Meanwhile, the total surplus increased to £225bn in the Superfund Index, representing a funding level of 125 per cent.

Improved funding levels are enabling schemes to pursue endgame options, but poor or incomplete data remains a challenge, leading to higher pricing, delays and missed opportunities to access surplus, PwC noted.

PwC pensions partner, Saye Mkangama, said the continued strength across most UK DB pension schemes means that many can focus on choosing the most attractive choice from the endgame options available.

“Whether a scheme can move quickly and with conviction once they have made this choice is determined by the quality and accessibility of its data,” he continued.

“Trustees, sponsors and insurers need confidence that member data and benefit records are complete, consistent and ready for transaction.”

But for many schemes, data remains a challenge, he added.

PwC acknowledged the role artificial intelligence can play in supporting trustees. The Pensions Regulator (TPR) recently set out its expectations for the responsible use of AI in workplace pensions, in its new AI Plan.

PwC employer covenant and restructuring partner, Katie Lightstone, commented: “TPR’s new guidance sends a clear message: AI is not a future issue for pension schemes; it’s already here. The guidance supports innovation, while making clear that trustees remain accountable for outcomes and member protection.”

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