The aggregate UK defined benefit deficit at the end of June was down to £176bn, compared with £209bn a year ago, the latest JLT Employee Benefits monthly index revealed.
This index shows the funding position of all UK private sector defined benefit (DB) pension schemes under the standard accounting measure (IAS19) used in company reports and accounts.
Charles Cowling, director of JLT Employee Benefits, said: “This last month has seen a general election and more political turmoil, yet markets continue to hold up well. As a result, defined benefit pension deficits are drifting lower.
"However, recently we have seen increasing evidence of The Pensions Regulator’s (TPR) willingness to flex its muscles when it comes to the funding of pension schemes.
"Only this week The Pensions Regulator announced that it has recovered over £1bn for DB schemes using its anti-avoidance powers.
"This was on top of its recent annual funding statement in which The Pensions Regulator said that they would intervene in circumstances where they thought total payments to shareholders were being prioritised over funding the pension scheme.
“Given too that The Pensions Regulator has just been granted £3.5m of additional funds to boost its compliance and enforcement work, it is evident that companies and trustees can expect a lot more scrutiny from the regulator.
“Many pension schemes will be carrying out actuarial valuations now and beginning to agree new deficit recovery contributions. Even though deficits may have improved a little in recent months, for many pension schemes they will still be much higher than in 2014 when deficit contributions were last agreed."
Scott Gallacher, chartered financial planner at Leicester-based IFA Rowley Turton, said: "It is crucial that defined benefit schemes are sufficiently funded and rogue employers are not able to avoid their liabilities.
"Consequently it is reassuring that The Pensions Regulator is getting additional funding."
Anna Sofat, managing director of London-based IFA Addidi Wealth, said she was not surprised by these figures as the markets have been been pretty buoyant.
Ms Sofat said: "Of course, this amount fluctuates every month but most pension trustees do a good job in managing what is a very long term investment but it is important also to look at the employer covenant. Transfer values remain high."
stephanie.hawthorne@ft.com
