The aggregate deficit of the around 5,000 defined benefit (DB) schemes in the Pension Protection Fund (PPF) 7800 Index has decreased to £158bn at the end of September.
This represents a drop of £62.4bn when compared to the previous month’s figures of £220.4bn.
The funding ratio increased from 87.6 per cent at end of August to 90.6 per cent.
DB schemes’ total assets were £1.5trn, while total liabilities were £1.7trn.
There were 4,079 schemes in deficit and 1,715 schemes in surplus, the PPF said.
According to Andy Tunningley, head of UK strategic clients at BlackRock, schemes have the Bank of England to “thank for their turn of fortune”.
He said: “At its Monetary Policy Committee meeting earlier in the month, the Bank delivered a surprisingly hawkish message, articulating a more positive economic outlook and a clear indication that there will be a rate hike in coming months, absent any shocks.
“This spurred a repricing in the UK government bond market; 20-year real and nominal yields both rose by over 20 basis points, pushing pension scheme liability values lower and funding levels higher.”
Despite the good numbers, Mr Tunningley argued that schemes “should be concerned that their funding levels are so susceptible to movements in market interest rates, even when it works in their favour”.
The PPF figures are in line with the number presented earlier this month by JLT Employee Benefits.
The shortfall of all UK private DB schemes decreased by £25bn in one month, to £174bn at the end of September.
Last month, the PPF 7800 Index registered a deficit increase of £40bn.
maria.espadinha@ft.com
