The aggregate surplus of 5,215 defined benefit (DB) pension schemes increased to £176.4bn at the end of March 2022 from £133.6bn at the end of February 2022, according to the Pension Protection Fund (PPF).
Overall, the funding ratio is estimated to have increased to 111.4 per cent from 108.4 per cent at the end of February 2022, the highest it has been since June 2007.
At the end of March 2022, total scheme assets were £1,721.5bn. Total scheme assets decreased by 0.6 per cent month over month. Total scheme liabilities were £1,545.1bn, down 3.3 per cent from the previous month and 7.7 per cent from the previous year.
Of the 5,215 schemes, 1,908 were in deficit and 3,307 were in surplus. The total deficit of the schemes in the deficit was £62.9bn at the end of March 2022, down from £83.1bn at the end of February 2022.
Buck head of retirement consulting Vishal Makkar says: “Funding levels for the schemes in the PPF Index improved over the course of March, as total liabilities fell sharply. With more than 3,300 of the 5,215 schemes in the PPF Index ending the month in a funding surplus, the thoughts of many trustees may turn towards other goals.
“The recent Spring Statement offered no major shake-up for pension schemes, with nothing new in terms of requirements or regulation for trustees to contend with. Unfortunately, the Chancellor also offered little in the way of relief when it comes to the ongoing cost of living crisis. The rising cost of living remains an important worry for scheme members and an increase in National Insurance contributions may well be a further pain point for those who haven’t yet reached retirement.
“Rising inflation could also impact most scheme sponsors and is likely to affect end game-planning for many schemes this year. A combination of inflation and accompanying interest rate hikes could make 2022 a difficult year for DB schemes as they grapple with a rapidly-shifting investment landscape. Trustees will need to plan carefully and may want to speak with a trusted adviser to help them navigate this new environment.”
