DB schemes’ surplus drops £12.8bn in February

This meant the surplus fell to £133.6bn at the end of February from £146.4bn in January.

Section 179 liabilities, the level of assets needed to secure PPF-level benefits with an insurer, were 108.4 per cent funded in February, down from 109.1 per cent in the previous month.

By the end of February, total assets in DB schemes stood at £1.73tn, while total liabilities were £1.6tn. There were 2,172 schemes in deficit and 3,043 schemes in surplus, the PPF stated.

The aggregate shortfall of the schemes in deficit at the end of February was £83.1bn, up from £80.9bn in the previous month.

According to Lisa McCrory, PPF’s chief finance officer and chief actuary, while the aggregate funding position for DB schemes the pensions lifeboat protects “remains positive overall, a fall in global equity assets, offset by an increase in most bond yields, has seen the aggregate surplus fall to £133.6bn”.

“This also means more schemes are in deficit with an increased aggregate deficit of £83.1bn. Although the change at an aggregate level is small, the impacts on some individual schemes may be more significant,” she added.

For Vishal Makkar, head of retirement consulting at Buck, the slight drop in DB schemes’ surplus “may well be the calm before the storm though, and there could soon be more volatility on the way as Russia’s invasion of Ukraine continues to impact global markets”.

He said: “Investment markets have already experienced serious turmoil and it’s still difficult to predict what the likely long-term effects might be.

“There is, however, still plenty for trustees to do in the meantime. Newly published guidance from the Pensions Regulator has set out a clear list of concerns, from the potential impact of sanctions to an increased risk of cyber attacks, financial crimes and scams.”