The funding position of schemes in the Pension Protection Fund (PPF) remained steady, with the aggregate surplus rising moderately in July.
In total the aggregate surplus of the 5,050 schemes in the PPF 7800 Index is estimated to have increased to £475.5 billion at the end of July 2024, up from £473.6 billion at the end of the previous month.
However figures for this safety net fund, show that the funding ratio decreased slightly from 149.4 per cent at the end of June to 148.5 per cent.
Overall the schemes in the PPF had total assets £1,455.9 billion, and there were 4,589 schemes in surplus.
Broadstone actuarial director Sarah Elwine says: “The latest funding estimates for DB pension schemes from the PPF showed that funding remained steady with a slight uptick in the aggregate surplus.”
However she pointed out that these figure to not fully take into account the effects of the Bank of England’s first rate cut in four years, nor the market turbulence that followed weaker than expected labour figures in the US and the Federal Bank keeping rates on hold.
She says: “It is a reminder to trustees and scheme managers that market volatility remains present especially as economies plot a route to lower rates.
“In a falling yield environment, schemes should be reviewing their hedging ratio and even considering introducing hedging, where perhaps they have resisted previously. Now is a good time for trustees and employers to leverage improved funding positions and also consider the impact of the Regulator’s new funding code to agree on longer term plans.”
Standard LIfe business development actuary Charlotte Fletcher adds: “Despite market volatility and the Bank of England’s decision to cut interest rates, the de-risking market is likely to remain robust.
“Schemes continue to be a strong position to move forward with their endgame strategies, with 4,589 schemes in the PPF 7800 Index in surplus according to the latest figures.
“Looking ahead, effective preparation will continue to be critical, particularly with the publication of the TPR Defined Benefit funding code in July. Trustees will be focused on ensuring strategies align with this framework as they look to progress with their de-risking objectives.”
