The aggregate funding position of the 5,450 corporate pension plans tracked by the UK’s Pension Protection Fund’s PPF 7800 Index rose to 100.9% in November from 95.9% at the end of October, with new actuarial assumptions boosting the pensions’ funding level beyond fully funded.
The PPF reported that the funds improved to an estimated surplus of £14.3 billion at the end of November from a deficit of £67.2 billion at the end of October. Total assets were £1.58 trillion, while total liabilities were £1.57 trillion. Total pension assets fell 0.5% during the month, but increased by 1.1% over the year, while total liabilities fell 5.4% for the month, and 5.2% from the same month last year.
The number of plans in deficit decreased to 3,008 at the end of November from 3,420 at the end of October, and now represent 55.2% of the total defined benefit plans tracked by PPF. Meanwhile, the number of plans in surplus increased to 2,442 at the end of November, representing 44.8% of plans, from 2,030 at the end of October (37.2%), and 1,925 plans in surplus at the end of November 2017 (34.4%).
The aggregate deficit of all plans in deficit fell to £137.6 billion at the end of November from £184.8 billion at the end of October, and from £197 billion at the end of November 2017. Meanwhile, the total surplus of plans in surplus rose to £151.9 billion at the end of November, from £117.6 billion at the end of October, and from £109.4 billion at the same time last year.
The PPF also said it moved to a new dataset that is based on a more up-to-date universe of pension plans, which excludes plans that have entered PPF assessment, for example, and uses more recent funding information from the plans.
It said the change increased the funding level at the end of October by 2.3 percentage points and improved the aggregate funding position by £40.5 billion. And for the figures for the end of November, the new dataset accounts for a new version of the actuarial assumptions for s179 valuations, which increased the funding level by 5.1 percentage points.
Without the new actuarial assumptions, the funding level for November would have been 95.8%, a decrease of 0.1 percentage points over the month as an increase in gilt yields led to decreases in liability values. Equity markets and gilt yields are the main drivers of funding levels.