UK’s private pension plans continued to improve their funded status in October, as assets rose while liabilities fell for the second consecutive month, according to JLT Employee Benefits (JLT).
JLT said that buoyant equity markets have continued to boost defined benefit pension plans, as deficits continue to decline—despite concerns over rising inflation.
“However, many challenges still remain,” said Charles Cowling, director, JLT Employee Benefits, in a release. “Pension schemes which are carrying out actuarial valuations in 2017 are likely to show bigger deficits than in 2014,” he said, adding that “trustees and finance directors may wish to take advantage of these slightly calmer waters to explore opportunities to offload and settle pension liabilities.”
As of Oct. 31, JLT estimated that the funding level of all UK private-sector pension plans had increased to 91% from 90% at the end of September, and up from 84% at the same time last year. Total assets for the plans topped out at £1.586 trillion, compared to £1.558 trillion at the end of September, and £1.527 trillion at the end of October 2016. Liabilities for the plans edged up to £1.74 trillion from £1.737 the previous month, but were down from £1.809 trillion at the same time last year.
This resulted in the deficit for all UK private-sector pension plans falling to £154 billion from £179 billion at the end of the previous month, and is down £128 billion from £282 billion as of Oct. 31, 2016.
For the FTSE 100 companies, the funding level rose 2% during the month to 95% at the end of October, compared to 87% at the end of October 2016. Assets grew £9 billion to £673 billion from the end of September, and were up £30 billion from the £643 billion in assets reported in the year-ago period. Meanwhile, liabilities for the FTSE 100 pension funds increased £1 billion during the month to £712 billion, but dropped from £738 billion at the end of October 2016.
The deficit for the FTSE 100 companies fell £8 billion to £39 billion from the previous month, and was down £56 billion from £95 in the year-ago period.
And for the FTSE 350 companies, the funding level gained 1% during the month to 94% at the end of October, and was up 7% from the same time last year. Total assets for the group were £760 billion as of Oct. 31, compared to £749 billion at the end of September, and £729 billion at the end of October 2016. Total liabilities increased by $1 billion during the month to £809 billion, but were down from £841 billion at the same time the previous year.
As a result, the deficit for the FTSE 350 pension funds fell £10 billion during the month to £49 billion, and has been reduced by more than half from £112 billion at the end of October last year.