The aggregate surplus of defined benefit (DB) pension schemes in the UK increased to £374.7bn at the end of October 2022, up from £374.5bn at the end of September 2022, the Pension Protection Fund’s (PPF) 7800 Index has revealed.

According to the index, total scheme assets experienced a 2.7 per cent increase over the month to £1,490.3bn, although this was more than offset by the 3.7 per cent increase in total scheme liabilities to £1,115.6bn.

This prompted a slight fall in the funding ratio from 134.8 per cent at the end of September 2022 to 133.6 per cent, although this still marks an improvement on the same time last year, with a funding ratio of 106.8 per cent recorded at the end of October 2021.

The number of schemes in deficit at the end of October 2022 increased from 746 to 756, with the deficit of the schemes in deficit also increasing from £5.3bn at the end of September 2022 to £5.8bn at the end of October 2022.

The number of schemes in surplus decreased correspondingly to 4,459, while the total surplus of schemes in surplus increased to £380.5bn as at the end of October 2022.

Commenting on the latest update, Broadstone senior actuarial director, Jaime Norman, stated: “DB pension schemes have experienced significant volatility during the last month in the aftermath of the controversial mini budget.

"Gilt rates see-sawed dramatically as the initial market reaction was countered by the Bank of England’s emergency intervention.

“While the market has calmed and a sense of stability has returned, the long-term picture on schemes’ investment strategies is still uncertain as we await further data on liability-driven investment funds, which make up a significant proportion of UK pension scheme assets.

“Reassuring members that their pensions remain secure and payments are largely unaffected will be a key responsibility of schemes over the coming months given the level of noise that accompanied the market fallout.

"The wider improvement in funding levels seen throughout the year also means that de-risking opportunities are more affordable than previously thought.”


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

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