The aggregate defined benefit (DB) pension surplus continued to fall last month, reaching £81.4bn as of the end of November 2021, according to the latest Pension Protection Fund (PPF) 7800 Index update.

This compared to a surplus of £114.5bn at the end of October 2021, with the funding ratio for the schemes in the index also falling from 106.8 per cent at the end of October 2021 to 104.6 per cent.

Furthermore, whilst the number of schemes in deficit remained relatively stable at 2,403, the aggregate deficit of the schemes in deficit at the end of November 2021 increased to £125.9bn, up from £103.4bn at the end of October 2021.

At the end of November, total assets stood at £1,842.7bn, down from £1,844bn the previous month, while liabilities increased from £1,740.8bn to £1,761.3bn during the same period.

The PPF Index was also updated this month to move to the new Purple Book 2021 dataset, with the funding position from March 2021 to October 2021 re-stated to reflect this.

This resulted in a 0.9 percentage point increase on the 31 October 2021 funding ratio to 106.8.

Commenting on the update, PPF chief finance officer and chief actuary, Lisa McCrory, commented: “The aggregate surplus of the 5,215 schemes we protect continued to worsen, reducing from £114.5bn last month to £81.4bn.

“This worsening in scheme funding is due primarily to recent decreases in bond yields and reminds us how market volatility can impact scheme funding levels.”

Buck head of retirement consulting, Vishal Makkar, however, pointed out that this time last year the aggregate deficit of the schemes in the PPF Index was £78.8bn, highlighting this as "a testament to the impact of the pandemic in 2020 and its effect on the global economy".

"Clearly the pandemic has been a hugely difficult period for DB schemes and many of their sponsors, but overall, since the start of the year DB schemes funding positions have generally been on a more positive trajectory, as evidenced by today’s surplus figures, albeit with some volatility along the way," he continued.

“This doesn’t, however, mean the challenges of the pandemic are over. With the proliferation of the new Omicron variant and the spectre of potential new lockdown measures in England looming, schemes still have a tricky path to navigate in 2022.

"These challenges aren’t only limited to the logistical and economic difficulties posed by the pandemic and rising UK inflation. Schemes also face a number of administrative and regulatory hurdles in the new year."

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