Defined benefit (DB) pension schemes continued to improve their funding levels at the start of 2025, according to the Broadstone Sirius Index, but turbulence is expected to come with a global trade war "simmering".

The Broadstone Sirius Index, which monitors how various pension scheme strategies are performing on their journeys to self-sufficiency, revealed that funding levels for the 50 per cent hedged scheme increased from 103.4 per cent to 103.7 per cent in January, with a £0.1m increase in its surplus to £1.0m.

This marked a "significant" improvement since the start of last year when the scheme had a £1.2m deficit and a 96.1 per cent funding level.

The fully hedged scheme also improved "significantly" in January, with the funding level moving from 69.4 per cent to 69.9 per cent.

The deficit also held steady at £8.1m and, through the month, nudged below £8m, the lowest since tracking started with a £10m deficit 3 years ago.

Broadstone head of trustee services, Chris Rice, said the findings were "encouraging".

"As 2025 commences, both of our tracked schemes have consolidated the gains made in 2024 despite a bout of market volatility mid-way through the month."

However, Rice warned that trustees must be aware of the possibility of a return to inflation and the consequent impact on funding levels, with a potential global trade war on the horizon.

"With further turbulence looking likely ahead, the 50 per cent hedged scheme could also consider hedging strategies to lock their positive position down," he stated.

"There are further regulatory issues for trustees and sponsors of defined benefit schemes to consider in 2025, with the potential for surplus return and the new funding code for those schemes embarking on valuations."

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