The aggregate surplus of defined benefit schemes in the Pension Protection Fund increased in October, despite the widespread volatility in bond and gilt markets.
In total the surplus of the 5,215 schemes increased to £374.7bn at the end of October 2022, up from £374.5bn the month before.
The funding ratio decreased from 134.8 per cent at the end of September of 133.6 per cent. Total assets were £1,490.3bn and total liabilities were £1,115.6bn.
In total 4,459 schemes were in surplus and 756 in deficit. The deficits of these latter schemes was £5.8bn at the end of October – which was up from £5.3bn at the end of September.
Standard Life senior business development manager Rhian Littlewood said: “
“As bond markets have started to settle after a period of upheaval, there has been little change in funding levels since the end of September, which is reflected in the latest figures.
“Defined benefit schemes are generally in a more secure position ahead of the new year compared to a year ago, and these broadly positive trends come as long term interest rates stabilise somewhat in late October compared to the volatility that followed September’s mini- Budget.
“Next week’s statement from the Chancellor will be watched carefully, as the market is expecting a conservative approach to borrowing and spending commitments and if this isn’t borne out there could be further volatility.”
She adds: “Looking forward, we anticipate many will look to lock in their position and secure the gains afforded by their funding position. As insurance rates remain competitive and desirable, more schemes are exploring their options, with the possibility of buy-out now more possible than ever.”
Buck head of retirement Vishal Makkar adds: “The markets saw a bit more stability over the course of October and while the effects of the mini-Budget at the end September are still being felt, the initial turmoil seems to have calmed.
“This has been reflected in DB scheme funding levels, which remained steady through October at a surplus of £374.7 billion.
“Whether schemes are truly out of the storm, however, or merely in the calm of the eye of the hurricane remains to be seen. There is understandably a great amount of pressure and expectation resting upon the new Chancellor’s upcoming fiscal statement, which is due on November 17th. Trustees will likely be hoping the speech provides something safe and reassuring for the markets, to avoid the volatility which followed the September Budget.”