DB schemes’ surplus increases £55bn in May

This meant that the surplus rose to £261.6bn at the end of last month from £206.2bn in April.

Section 179 liabilities, the level of assets needed to secure PPF-level benefits with an insurer, were 118.9 per cent funded in May, up from 114 per cent in the previous month.

By the end of May, total assets in DB schemes stood at £1.64tn, while total liabilities were £1.38tn. There were 1,450 schemes in deficit and 3,765 schemes in surplus, the PPF stated.

The aggregate shortfall of the schemes in deficit at the end of May was £28.2bn, down from £47.8bn in the previous month.

According to Lisa McCrory, PPF’s chief finance officer and chief actuary, these figures “set two new records” — the highest aggregated funding ratio and the lowest number of schemes in deficit.

“This continues the trend of improving funding driven by rising gilt yields. While it’s positive to see these ongoing improvements in scheme funding, we are mindful that the impacts for individual schemes will be varied and that some schemes remain materially underfunded,” she said.

“It is important that trustees are monitoring their scheme’s funding position and understand the risks and opportunities arising from the current environment.”

Vishal Makkar, head of retirement consulting at Buck, noted that despite the positive figures, for some scheme sponsors the “outlook may not be so positive”.

He pointed to figures from the Office for National Statistics showing that gross domestic product fell for the second month in a row in April, dropping by 0.3 per cent following a decrease of 0.1 per cent in March.

“High inflation and the cost of living crisis could also continue to negatively impact industries like hospitality, which in many cases are still reeling from the effects of the pandemic,” Makkar said.

“Meanwhile, high energy costs and ongoing supply chain disruption remain key challenges for other scheme sponsors, particularly in sectors such as manufacturing.”