Funding for UK Defined Benefit Plans Rises in December

The funding ratio of the 5,450 UK-based defined benefit pension plans in the Pension Protection Fund’s PPF 7800 Index increased to an estimated 98% at the end of December from 96.1% at the end of November. The plans’ aggregate deficit was nearly halved to £35.4 billion ($46.1 million) from £71.1 billion.

The Pension Protection Fund reported that despite the sharp drop in the aggregate deficit, the plans’ position has worsened from a year earlier when the deficit was £31.9 billion at the end of December 2018. However, the funding level at year-end 2019 was the same as at year-end 2018. The Pension Protection Fund is the UK’s lifeboat for struggling pension plans.

The combined assets for the plans totaled £1.74 trillion at the end of December, a 0.2% decrease over the month, and an increase of 10.8% over the year. The aggregate liabilities for the plans fell to £1.78 trillion at the end of December, a 2.2% decrease over the month, but a rise of 10.8% from December 2018.

There were 3,168 plans in deficit at the end of December, which represented 58.1% of all plans in the index, and down from 3,328 at the end of November, or 61.1% of the plans. This was also down from a year earlier when 3,271 plans, or 60% of all plans in the index, were in deficit at the end of December 2018.

Total deficit for the plans in deficit at the end of December decreased to £184.9 billion from £208.9 billion at the end of November but increased from £166.4 billion at the end of December 2018.

The Pension Protection Fund also estimates that the number of plans in surplus increased to 2,282 at the end of December, or 41.9% of all plans. That is compared with 2,122 plans in surplus at the end of November, or 38.9%, and 2,179 plans in surplus at the end of December 2018, or 40% of all plans in the index.

The total surplus of the plans in surplus increased to £149.5 billion in December from £137.8 billion the previous month, and from £134.6 billion at the end of December 2018.