UK defined benefit (DB) pension schemes' funding positions remained stable in September, with an "extremely positive" aggregate surplus of around £186bn, analysis from XPS Pensions Group has revealed.

This marked a slight increase on the £176bn surplus seen in August, while the aggregate funding level on a long-term target basis also increased from 114 per cent to 155 per cent, as of 27 September.

Liability and asset values remained broadly unchanged at £1,471bn and liabilities of £1,285bn, however, as falls in gilt yields and equity markets early in September had reversed by the end of the month.

XPS pointed out that DB schemes' strong funding levels also held firm when the Monetary Policy Committee voted to maintain the Bank of England base rate at 5 per cent, with inflation within 0.5 per cent of the Bank's target for the fifth consecutive month.

However, XPS pointed out that attention has now turned towards the Chancellor’s Autumn statement on the 30 October, as well as the next MPC meeting on 7 November, with expectations that this could bring a base rate cut.

“With a highly anticipated budget and possible further rates cuts on the horizon, pension scheme funding levels have remained near record levels," XPS senior consultant, Henry Shore, said.

"With these surpluses – and with the new DB funding regulations now in force – many trustees and sponsors are now looking at their long-term strategies and strategy paths to assess whether insurance is the right route for them or if the scheme can be used to generate additional surplus for the benefit of both members and sponsors alike.”

---