Half-hedged defined benefit (DB) pension scheme funding levels improved in October, leading to a "reasonable" surplus, according to analysis from Broadstone.

Its Sirius Index, which monitors how various pension scheme strategies are performing on their journeys to self-sufficiency, revealed that its 50 per cent hedged scheme, which last month reached full funding on a self-sufficiency basis, has now reached surplus.

According to the update, the half-hedged scheme funding improved from 100.3 per cent to 101.8 per cent, with its surplus increasing by £0.4m to £0.5m.

The fully hedged scheme also held its funding level with a small reduction from 69.5 per cent at the end of September to 69.4 per cent at the end of October.

However, rising rates reduced assets and liabilities so the deficit fell by £0.2m to £8.4m.

Broadstone head of trustee services, Chris Rice, said: "Thankfully, in the face of a highly anticipated Autumn Budget on October 30, scheme funding remained largely stable throughout the month.

“There were steady rises in interest rates in October, reducing liabilities and hedging assets.

“This caused the fully hedged scheme to hold its funding level as expected, but the half-hedged scheme continued to improve its funding level with a reasonable surplus now being disclosed.

“Recent improvements in the under-hedged scheme over the past few months serve as a reminder to trustees of partially hedged schemes that their funding status may be stronger than anticipated, making this a potentially opportune moment to consider enhancing their protection.”

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