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DB funding levels improve amid ongoing economic uncertainty

by Emma Simon
July 8, 2025
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DB funding continue to improve in June, thanks to rising asset values, although economic uncertainty could act as a brake on this positive trend.

This was demonstrated with the aggregate surplus of the schemes in the PPF 7800 Index, increasing by £9.4bn over the month. There are almost 5,000 schemes in this lifeboat Pension Protection Fund. 

Although all entered the PPF because of deficits, the number of schemes in surplus continues to rise. THis figure went up again in June, and there are now  almost three-quarters of these schemes (a total of 3,635) in surplus. The total value of these surpluses now stands at  £230.5bn (up from £221.1bn in May). 

Figures from the PPF shows the funding ratio rose by 0.6 percentage points to 126.2 per cent.

Commenting on these figures Broadstone’s actuarial director Sarah Elwine, says: “Rising asset values through June supported an improved funding position for many defined benefit pension schemes. Across the universe of schemes, the picture remains one of robust health with the majority of schemes now registering a surplus increasing their options and decreasing their cost to the sponsoring employer.

“As we look ahead to the second half of 2025, the only known appears to be more unknowns as uncertainty appear likely to persist amid ongoing tariff negotiations, volatile geopolitics and a challenging Autumn Budget for the UK Chancellor to deliver.

“This creates a difficult environment for trustees as they look to navigate through the turbulence. Investment strategies must be closely managed to achieve longer-term objectives however opportunities continue to emerge in the insurance market, with new options on offer and reforms making run-on a more attractive route for many schemes.”

Standard Life business development actuary Charlotte Fletcher adds: “Funding levels for UK defined benefit (DB) pension schemes continued to rise during June 2025. The aggregate section 179 funding ratio for the 4,969 schemes in the PPF 7800 Index now stands at 126.2 per cent at the end of June 2025, up slightly from 125.6 per cent at the end of May.

“This modest improvement over the last month continues a broadly positive trend in 2025, with many schemes maintaining their strong funding position. 

“However, geo-political developments continue to drive some market uncertainty, and trustees may be looking to take a more proactive stance. With bulk annuity pricing remaining at competitive levels, now may be an opportune moment to lock in gains, particularly for schemes that have achieved their long-term funding objectives.”

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