The aggregate surplus of defined benefit (DB) pension schemes has more than doubled over the past year, despite falling slightly to £374.4bn at the end of January 2023, according to the Pension Protection Fund’s (PPF) 7800 Index.

This was based on total assets of £1,450.6bn and total liabilities of £1,076.2bn, with the funding ratio also falling to 134.8%, down from 136.5% at the end of December 2022.

Despite the £2.3bn fall in the aggregate surplus, however, the aggregate funding position improved year-on-year, with a surplus of £146.4bn, and a funding ratio of 109.1%, recorded at the end of January 2022.

Commenting on the update, PPF chief finance officer and chief actuary, Lisa McCrory, stated “We’ve seen the aggregate assets and liabilities of schemes in the PPF 7800 Index rise in January, as yields on government bonds fell.

“This was in part due to falling energy prices, which has led to markets anticipating that global central banks are getting close to the end of their tightening cycle and slowing the pace of rate rises – an expectation that was realised at central bank policy meetings in the first week of February.”

Adding to this, Standard Life senior business development manager, Kieran Mistry, explained that while DB funding levels remained “relatively stable”, the turbulent recent economic environment has seen DB scheme trustees and sponsors focusing on their DB de-risking and endgame strategies.

Mistry continued: “With many schemes closer to their endgame than expected, the bulk annuity market has got off to a rapid start, and this is expected to continue throughout the year.

“Ultimately, with the potential for a challenging economic backdrop over the rest of 2023, schemes will be aiming to lock down risk and benefit from any gains over the last year.

“For schemes hoping to secure a buyout in the short to medium term, the focus should be on ensuring they are fully prepared before approaching insurers to get the best out of a very busy market.”

Indeed, Broadstone chief actuary, David Hamilton, noted that 2023 is set for a “bumper year of de-risking”, emphasising the need for pension scheme trustees and sponsors to revise their plans accordingly to manage risk levels whilst they prepare for buyout.

“They will face a hugely competitive market when it comes to attracting and engaging insurers so, more than ever, good preparation and a high quality of data will be critical, particularly for schemes at the smaller end of the market,” he warned.

Buck head of retirement consulting, Vishal Makkar, suggested that there may also be broader considerations for DB trustees in light of the funding improvements, stating that “many schemes will then be turning their attention to issues of governance”.

In particular, Makkar pointed out that the new Single Code of Practice from The Pensions Regulator is expected to come into force this year and “should be a key area of focus for trustees”.

He continued: “Two of the major requirements that schemes will have to deal with are establishing an ‘effective system of governance’ and carrying out an ‘own risk assessment’, both of which are likely to be substantial pieces of work.

“Schemes have had a long time to prepare for the new Single Code, so it’s vital they have a plan in place to meet their obligations.

“Evaluating existing practices and carrying out a gap analysis are important first steps, but schemes should now be turning their attention to the timelines, checklists and procedures they need to ensure they meet the requirements of the regulator.

“Failure to act early on this could jeopardise the scheme’s journey plan and seriously hinder progress towards other long-term objectives, such as buyout.”


This article first appeared on our sister title, Pensions Age.

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