The net funding position for defined benefit (DB) pension schemes has remained largely stable over the past year, with a net surplus of £219bn, the Pension Protection Fund's (PPF) latest Purple Book has revealed.

The research, now in its 19th year, made use of an updated methodology and enhanced data, as the PPF looked to create greater alignment across DB funding estimates in the industry.

In particular, the PPF used an enhanced roll-forward methodology to calculate assets and liabilities which now uses a wider range of market indices, more granular asset allocation data, and estimates for benefit cashflows.

In addition to this, it used new enhanced scheme status data as analysed by The Pensions Regulator (TPR).

To allow for easier comparison, the PPF also shared revised figures for 2023, which saw the estimated aggregate funding ratio for DB schemes in 2023 fall from 134.3 per cent to 120.1 per cent, while the estimated surplus was revised from £358.9bn to £206.9bn.

This means that the funding position of DB schemes in 2024 were "largely consistent" with last year’s restated figures, as at the end March 2024, there was a net surplus of £219bn on a section 179 basis and a funding ratio of 123 per cent.

The net deficit of schemes that are in deficit, on the same basis, fell to £21bn as of March 2024.

Furthermore, when estimated on a full buyout basis, the funding ratio rose over the year to 94 per cent, up from 90.3 per cent in 2023.

And whilst the revised figures resulted in significant revisions to the 2023 figures, LCP partner, Steve Webb, warned against "over-reacting", noting that they mostly reflect the change in method rather than an actual reduction in scheme funding,

Webb stated: "Although these are big revisions to the figures, it is important that we don’t draw the wrong conclusions about what has been happening to DB scheme funding in the last decade.

"The overwhelming story remains one of dramatic improvement in overall scheme funding as evidenced by a range of data sources which have not changed. This includes data from company accounts and the evidence from transactions in the de-risking market.

"The overall funding position of most DB pension schemes is significantly better than a decade ago and today’s statistical revisions do not change that fact’.

More broadly, the Purple Book showed that the DB universe remains highly fragmented with a "long tail" of smaller schemes.

Indeed, schemes with fewer than 1,000 members make up 80 per cent of the total number of schemes but only around 10 per cent of total assets, liabilities, and members.

In addition to this, most (93 per cent) schemes are closed to new members; out of 8.8 million members, only 0.7 million remain active.

Investment shifts were also identified, as while the PPF found that DB schemes have continued to invest a large proportion (70 per cent) of their assets in bonds, there has been a further reduction in both the overall proportion of assets held in equities, down to almost 15 per cent.

Within this, less than 7 per cent was allocated to UK equities.

By contrast, there has been a sharp increase in the proportion invested in private equity – up to almost 44 per cent.

Commenting on the update, PPF chief actuary, Shalin Bhagwan, said: “After the dramatic improvements to DB funding levels in recent years, the past year has been marked more by stability.

"While aggregate scheme funding remains strong – with a net surplus of £219bn – risks do remain, underscoring the vital importance of sound endgame planning.

"The DB universe continues to mature as evidenced by de-risking trends with bond allocations up and further reductions to equity holdings."

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