The market value of private sector defined benefit and hybrid (DBH) pension schemes fell by 1 per cent between 31 March and 30 September 2024, despite an increase in asset values, data from the Office for National Statistics (ONS) has revealed.

The ONS said that the fall, from £1,193bn to £1,178bn, was primarily due to an increase in the negative net derivatives balance and non-pension entitlement liabilities, which offset the increase in the value of assets.

Indeed, the ONS revealed that the value of DBH pension scheme assets rose by £7bn (1 per cent) between 31 March and 30 September 2024, primarily due to a £21bn rise in the value of insurance policies assets held by these schemes during this time.

In total, the value of private sector DBH pension scheme insurance policies assets was £166bn as of 30 September 2024, representing the highest value since the series began in Q3 2019.

The ONS highlighted this as an indicator of the growing number of buy-ins and longevity swap contracts being agreed, as its data suggested that most of this increase came from new bulk annuity transactions, with smaller schemes (with fewer than 2,000 members) in particular making up most of this increase.

However, the ONS pointed out that these figures are "volatile" as schemes may agree insurance policies infrequently and insurance policy assets may be transferred from the pensions sector to the insurance sector.

The ONS also confirmed that this increase in the value of insurance policies assets held by these schemes was partially offset by falls in the value of direct investments and pooled investment vehicles (PIVs) by £9bn, and £5bn, respectively.

Within direct investments, private sector direct investment in unquoted private equity and alternatives fell by £7bn (8 per cent) during that period, with private sector DBH pension schemes accounting for most of this fall.

In comparison, the market value of private sector defined contribution (DC) and public sector DBH pension schemes increased by £59bn (7 per cent), from £813bn to £872bn, during this period.

The main reason for this increase was growth in the value of both scheme types’ assets, with a particular rise seen in the value of pooled investment vehicles, equities holdings, and long-term debt securities.

According to the ONS, private sector DC pension scheme total assets increased by £27bn (9 per cent) between 31 March and 30 September 2024, while public sector DBH pension scheme total assets increased by £32bn (6 per cent).

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