The aggregate surplus of defined benefit (DB) pension schemes increased to £485.1bn at the end of October 2024, up from £476bn at the end of September, the Pension Protection Fund’s (PPF) 7800 Index has found.

According to the index, the funding ratio also increased from 148.4 per cent at the end of September to 151 per cent at the end of October.

This also marked a year-on-year improvement, as a surplus of £418.8bn was recorded at the end of October 2023, and a funding ratio of higher than the 146.8 per cent recorded at the same time last year.

According to the index, both liabilities and asset values fell over the month, as total assets stood at £1,437bn in October, compared to £1,458.8bn at the end of September, and total liabilities were £951.9bn, down from £982.8bn in September.

The index for October also showed that 4,600 schemes were in surplus.

Meanwhile, 450 schemes were in deficit, but again the deficit of these schemes had only risen slightly, with the deficit of schemes in deficit at the end of October rising to £3.7bn, up from £3.6bn at the end of September.

PPF chief actuary, Shalin Bhagwan, said: “Over the course of October we’ve seen both liability and asset values fall.

“With equities largely unchanged over the month, the main driver behind these movements was the increase in gilt yields, with a combination of global (US election) and domestic (UK Budget) forces sending 10-year and 30-year gilt yields to one-year highs.

“As the drop in liabilities outstripped the fall in asset values, the estimated funding ratio of schemes in the DB universe increased by 2.6 per cent, to 151 per cent.

“In terms of the aggregate surplus of schemes, the impact of these movements is estimated to have led to a £9.1bn increase over the month to £485.1bn. However, the deficit of the schemes in deficit rose slightly to £3.7bn, from £3.6bn at the end of September.”

Commenting on the update, Gallagher managing director, Vishal Makkar, said: “The DB pensions sector clicked into a steadier rhythm in October, reaching a total of 4,600 schemes in surplus.

“As the dust settles from the Autumn Budget and with the Mansion House speech just around the corner, the market finds itself in a fascinating interregnum.

“DB funding levels are certainly strong, but amid growing rumours of a mandate for schemes to allocate funds into British assets, there is a chance that the pensions sector will become an even more central cog in the UK’s economic machine.”

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