The funding of DB schemes continues to improve, with the aggregate surplus of the 5,050 schemes in the PPF 7800 index rising in March.
In total this surplus stood at £455.5bn at the end of March, up from £442.3bn at the end of February 2024 — an increase of over £10bn.
At the same time the funding ratio increased from 146.1 per cent at the end of February 2024 to 146.5 per cent in March.
This data shows there were a total of just 497 schemes in deficit compared to 4,553 schemes in surplus.
Commenting on these figures Broadstone actuarial director Sarah Elwine says: “The positive funding environment for defined benefit pension schemes continued in March with the aggregate surplus estimated to have risen by over £10bn as the rate of asset growth outstripped that of liabilities over the month.
“It is positive to see an increasing number of end game options for pension schemes, as many are now well funded and looking to their future choices during a period of comparative stability.
“We have seen the first two superfund deals, new entrants in the market with rumours of more to come, as well as a consultation around establishing a new PPF consolidator.”
She adds: “Scheme managers and trustees can also now explore the potential for running on as a viable alternative to buy-out by reaching low dependence on the employer’s support, especially as the regulator explores the ability of freeing up surpluses. The dramatic improvement in the funding environment over the last few years has given schemes a chance to knock on new doors, and so trustees should be proactive and well-advised in their decision-making process.”
Standard LIfe business development actuary Charlotte Fletcher adds: “The pension scheme buy-in and buyout market continues to be extremely busy, with volumes reaching nearly £50bn in 2023.
“For trustees looking to secure their scheme members’ benefits, it is important to carefully plan their approach. Managing any illiquid assets, for example, is highlighted as a key consideration for schemes in our new research report, with two-thirds of employee benefit consultants confirming illiquids have delayed a BPA transaction.”
She adds: “Looking ahead, the regulatory picture continues to evolve with the Department for Work and Pensions’ DB Funding and Investment Strategy and Amendment regulations coming into force from 6 April. However, with these latest figures highlighting how funding levels have remained strong and steady in 2024, we expect the de-risking market to maintain strong activity as schemes look to secure members’ benefits and lock in funding gains.”
