The total deficit of FTSE 350 DB pension schemes fell to £17bn, as of 30 November, according to research from Mercer.

In its latest Pension Risk Survey, Mercer found that the deficit had fallen by £19bn since the end of October.

The improvement partially offsets the significant shift back into deficit in October, from a £3bn surplus in September.

Mercer DB strategist and partner, LeRoy van Zyl said: “This is a meaningful reduction in the deficit but, as we approach the end of the year and as the government attempts to get the Brexit withdrawal agreement through parliament, trustees should evaluate the potential impact of political uncertainty on their sponsor’s financial security and put themselves in a position to capitalise on de-risking opportunities as they arise.”

Mercer revealed that liabilities fell from £795bn to £767bn due to an increase in corporate bond yields and a fall in a marker implied inflation.

Asset values fell from £759bn to £750bn and the quoted funding level increased from 95 per cent to 98 per cent.

Mercer senior partner, Adrian Hartshorn added: “This month’s improvement in the funded status is welcome after the significant impact of the Lloyds High Court judgment in October.

“However, there is still a considerable gap to bridge before pension schemes can return to surplus.

“Trustees should remain prudent, seek to lock in gains and ask themselves how much risk they need to take to meet their funding requirements.”

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