The funding position of defined benefit schemes continued to strengthen in December, after a positive 2025 for the sector.
The latest PPF 7800 Index shows the estimated aggregate funding position of DB schemes increased by £21.bn to £259.7bn, with the funding ratio rising by 0.3 percentage points to 130.2 per cent.
This is a significant increase over the past year, , with the funding ratio standing at 125.7 per cent in December 2024, 4.5 percentage points lower.
The figures are compiled from DB schemes’ annual valuation data. These figures relate to DB schemes that would be eligible for the Pension Protection Fund (PPF), should they run into financial difficulties.
Funding levels helps determine future levy’s paid by the sector. The strong financial position has meant the PPF has reduced the levy to zero for the year ahead for the first time since its inception.
PPF chief actuary Shalin Bhagwan says: ”The funding position of the PPF-eligible universe saw little change over the course of December as, overall, global equity markets experienced a fairly flat month and yields on long-dated gilts rose marginally.
“Though small, the changes seen were positive though. However, when stepping back and considering the position of the PPF-eligible universe over the course of the last year there has been a clear strengthening of aggregate funding.”
Vishal Makkar, managing director, UK Wealth Consulting at Gallagher says this latest data is “testament to the UK’s DB pension schemes and their ongoing resilience”.
He adds: “This continues the upbeat trend seen throughout 2025, where schemes maintained a strong financial footing, despite ongoing market volatility and wider fiscal uncertainty.
“This strong foundation will encourage trustees and sponsors to progress their long-term strategies, whether that means further de-risking, running on or progressing towards buy-out where appropriate.
“Further pension policy changes are expected in 2026, including the latest reading of the Pensions Scheme Bill. Pensions will remain central to the government’s broader economic growth plans. The challenge for trustees will be to respond to this evolving policy environment while keeping long-term member outcomes and scheme objectives front and centre.”
