The aggregate surplus of the 4,969 schemes in the PPF 7800 Index is estimated to have increased to £221.1 billion as of May 2025, from a surplus of £202.5 billion.
Meanwhile, the funding ratio increased by 2.8 percentage points to 125.6 per cent, and the number of schemes in surplus rose to 3,569, representing over 7 in 10, or 71.8 per cent, of all schemes in the universe.
It’s the first update since the government’s Pension Schemes Bill, which plans to make it easier for schemes to access and share surplus funds, aiming to boost investment and deliver more value to members. But a DWP assessment suggested the plans may unlock around £8-11 billion, substantially less than the £160 billion promoted by the government in the Bill.
Research from LCP suggests that most defined benefit (DB) pension schemes are either already planning to share surplus funds or will consider doing so soon, with larger schemes particularly interested. According to the research, two-thirds of those over £1 billion and 80 per cent of schemes over £5 billion are actively exploring surplus distribution.
Broadstone senior actuarial director Jaime Norman says: “It is pleasing that despite continued volatility in global markets, pension scheme funding remains resilient posting notable gains through May. Gains in equity markets offset rising bond yields amid continued uncertainty over Government borrowing and the impact of potential trade wars.
“The continued strength of funding could see sponsors rushing to discuss with trustees about the best route forward to release surpluses, to enable greater business investment. The increased flexibility from the Pension Schemes Bill, alongside new guidance from the Regulator, broadens the options for well-funded schemes.
“Now there is clarity over the Government’s plans in respect of funding and the Virgin Media case, and funding remains healthy, we would expect a renewed acceleration in pension scheme de-risking into the second half of the year. It has been a relatively quiet period for the bulk annuity market as market volatility and uncertainty over the Pension Schemes Bill caused many to take a ‘wait and see’ approach.”
Gallagher UK Wealth Consulting managing director Vishal Makkar says: “This month’s PPF 7800 Index shows an increase in aggregate funding, which stands at a surplus of £221.1bn. The UK’s network of DB schemes is in robust shape, and it will likely become an increasingly central pillar in the nation’s economic life, especially as the Pensions Scheme Bill makes its way through Parliament.
“Following the first reading of the Bill on 5th June, several details have come into focus. A new clause will encourage LGPS funds and pools to further consolidate their assets, laying the cornerstone for the creation of new DB superfunds. This aims to open the doors for new investment into essential infrastructure projects, such as roads and new-builds. However, what is vital is that members are protected and that any investment is scrutinised to the highest standard of fiscal responsibility.
“The Bill also contains proposals to allow DB pension funds to release surplus back to the sponsors, without being fully insured beforehand. However, trustees must ensure members are adequately protected and that any possible risk is analysed fully.
“As the Bill journeys through the usual rounds of parliamentary scrutiny, which could take several months and involve many amendments, the onus is on trustees to keep scheme members well-informed on the Bill and what its final form could mean for their finances. In an ever-changing economic climate, clear and transparent communication is a top priority.”