The latest defined benefit (DB) funding level provides an “encouraging outlook” for DB schemes, with revised data from the Pension Protection Fund (PPF) showing that the aggregate surplus of DB pension schemes increased to £235.5bn in November.

The update reflected the latest revised data and included several changes to the roll-forward calculation methodology used to estimate asset and liability values.

The new way of calculating assets and liabilities meant they were viewed as estimates of their values at a moment in time, the PPF explained.

This revealed a small increase in the estimated aggregate surplus of schemes, by £1.5bn to £235.5bn, while the estimated funding ratio experienced a very slight drop of 0.3 percentage points to 125.7 per cent.

Despite this, PPF chief actuary, Shalin Bhagwan, emphasised that the overall outlook for DB schemes is "still very encouraging", noting that, 10 years ago, the estimated buyout funding level was 62 per cent, but now sits at 94 per cent.

"On top of this, 2023 was a record year for risk transfer deals, with £60bn worth going through, and this positive trend has continued through 2024. So despite these revisions, the most important takeaway is that the DB universe is in good health," Bhagwan stated.

Despite a record year for pension insurance transactions in 2023, the PPF reported that its number of DB funds shrank by just 89 – reflecting the preference for buy ins as DB schemes move gradually towards full buyout.

Also highlighting the impact of its new methodology on longer term trends, PPF actuary, James Emmott, added: “These refinements have led to some significant changes in the data we are able to produce, and this can be seen in the estimated aggregate funding position of the universe.

"Using the previous dataset – from Purple Book 2023 – and the old methodology, the estimated aggregate funding position grew from a surplus of £359bn at 31 March 2023 to £456bn at 31 March 2024.

"With the new, enhanced dataset and methodology, the estimated surplus starts at a lower base and grew less, from £207bn to £219bn, over the same period.”

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