Half-hedged defined benefit (DB) pension scheme funding levels have seen a “steady” improvement through the first half of the year, rising from 96.1 per cent as of 31 December 2023 to 99.1 per cent as of 30 June 2024, analysis from Broadstone has found.

The Broadstone Sirius Index, which monitors how various pension scheme strategies are performing on their journey to self-sufficiency, saw a “small” rise in half-hedged scheme funding levels through June increasing from 99 per cent at the end of May.

However, fully hedged DB pension scheme funding saw a “marginal” decline between 31 December 2023 and 30 June 2024, falling by 0.5 percentage points to 68.4 per cent.

Meanwhile, fully hedged funding saw a “slight” improvement over the month, ticking up from 68.2 per cent at the end of May.

Broadstone head of trustee services, Chris Rice, commented that the first half of 2024 has been characterised by “welcome stability” in defined benefit pension scheme funding.

“We now enter the second half of the year with a new Labour government taking power for the first time in 14 years with a notable majority, a positive funding environment and a growth agenda that will prolong the current market stability,” he continued.

“We are expecting a wide-ranging pensions review which should help it consider and develop long-term policy and whether or not the consultations on surplus extraction and Public Sector Consolidator will be followed through will be important for trustees and sponsors to understand when setting their strategies for their schemes.”

However, Rice explained that “while we hope for stability, we should acknowledge there remains significant volatility which is likely to impact markets in the second half of the year given more countries will head to the polling booths and the geopolitical landscape remains turbulent”.

“It means trustees must not become complacent but must continue working with sponsors and consultants to develop long-term strategies that reflect the best interests of members,” he said.

“This will help ensure as far as possible their schemes can navigate any volatility if this is not already in place.”

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