The total surplus of the 5,131 schemes in the PPF 7800 Index is predicted to have dropped from £446.9b at the end of September 2023 to £441.4b as of October 2023.
The funding ratio remained at 147.5 per cent. There are now 473 schemes in deficit out of 4,658 schemes in surplus.
Broadstone senior actuarial director Jaime Norman says: “The surplus for Defined Benefit schemes appears to have settled at around the £440bn mark, a sharp increase from the aggregate deficit we saw prior to 2021.
“With higher gilts yields seeming to be sticking around and some positive news around inflation, pension scheme trustees and sponsors can approach the end of 2023 with a degree of confidence.
“The overall positive funding has made de-risking and buy-out more achievable for many schemes, leading to busy insurance market. Consequently, many pension scheme clients are working hard on their data and understanding their risks to make them attractive for insurers.
“Early work on administration and data management can be the difference between a scheme achieving a transaction or not in a competitive environment for de-risking.”
Buck head of retirement consulting Vishal Makkar says: “Today’s figures show a slight fall in the aggregate surplus of Defined Benefit (DB) pension schemes in the PPF 7800 index. This can be attributed to a decline in the value of assets in global equity markets last month, but DB schemes maintain a strong funding position having overcome the fiscal shocks of the Mini Budget and the LDI crisis. With the Autumn statement due to be announced next week, trustees and their advisers will be closely monitoring any early rumours, especially as many economists are predicting a relaxation of the Triple Lock, which could serve as a crucial indicator of what’s in store for the market.”
“Looking further into the future, schemes may consider leveraging their strong funding positions by focusing on the ‘endgame’. However, though numerous buyout options exist, smaller schemes may find it challenging to acquire the resources they need to remain attractive to insurers in an increasingly competitive market. By continuing to invest in advanced analytics and stronger data governance, trustees can ensure that their schemes remain viable for insurers going into the new year.”
