The aggregate deficit of the 5,588 schemes in the Pension Protection Fund (PPF) 7800 Index has decreased 9 per cent in the month to June.
According to figures published today (Tuesday), the deficit fell from the £94bn posted at the end of May to £85.6bn in June.
Funding levels increased from 94.5 per cent at the end of May to 94.9 per cent last month, with schemes holding £1.6trn in assets and a total of £1.69trn in liabilities.
There were 3,633 schemes in deficit and 1,955 schemes in surplus.
Since July 2007 the PPF has published the latest estimated funding position of eligible schemes on a s179 basis, meaning a scheme's liabilities, broadly speaking, represent the premium that would have to be paid to an insurance company to take on the payment of PPF levels of compensation.
This compensation may be lower than full scheme benefits.
The July update also showed the aggregate deficit of schemes in deficit had decreased to £200.2bn by the end of June, from £206.4bn at the end of May. In June last year the equivalent figure was £218.3bn.
The schemes in surplus meanwhile, increased their extra holdings to £114.6bn, from £112.3bn at the end of May. Last year the total surplus of all schemes in surplus stood at £95.5bn.
Despite the positive figures, Andy Tunningley, head of UK strategic clients at BlackRock (pictured), warned trouble may be ahead.
He said: “Schemes should make the most of the sunny outlook while it lasts - while equity markets remained buoyant in June, escalating geopolitical tensions and uncertainty over the viability of the latest Brexit proposal could cause unexpected downpours in the shape of equity market volatility which may remove funding level gains over the last year.”
Similarly, Boris Mikhailov, investment strategist for global investment solutions at Aviva Investors, said schemes should do more to increase the certainty of meeting pension promises.
He said: “According to the 2018 Mercer European Asset Allocation Survey, only 34 per cent of UK pension schemes have formal de-risking triggers in place. The remaining pension schemes have an informal approach.
"This means that opportunities to ‘bank’ unexpected improvements in funding positions by taking the risk off the table could be missed.”
Aamina.zafar@ft.com
