Defined benefit schemed saw their funding position improve overall in 2024, after deficits further reduced in December.
Figures from Broadstone’s Sirius index shows there has been positive funding progression for both a 50 per cent and fully hedged scheme — with both ending the year in a better funding positions than they started it.
Figures for December show that funding levels for the 50 per cent hedged scheme saw an increase from 101.4 per cent to 103.4 per cent in December with a £0.5m increase in its surplus to £0.9m. This contrasts to the point at the start of the year where the scheme had a £1.2m deficit and 96.1 per cent funding level.
Broadstone says this marks a significant improvement in its funding position, crossing into full self-sufficient funding and the scheme would now be able to explore an insurance transaction to secure the benefits of its members or the possibility of running on.
Broadstone adds that, as might be expected, the fully hedged scheme has been more stable throughout December and 2024 with the funding level decreasing slightly in the final month of the year from 69.5 per cent to 69.4 per cent. However, the deficit reduced by £0.3m to £8.1m. At the start of 2024 the funding level was 68.9 per cent and the deficit was £8.5m.
Broadstone head of trustee services Chris Rice says: “As we look back on 2024, the results of scheme funding have not been surprising in a rising interest rate environment. The fully hedged scheme has made steady progress, but the half hedged scheme has significantly improved its position crossing beyond full self-sufficient funding.
“The half hedged scheme could now derisk to protect its healthy funding position and work towards preparation for a bulk annuity purchase, or consider other endgame options. We expect many schemes to be holding similar discussions during 2025.”