Hard pressed private sector defined benefit (DB) pension schemes have seen a modest improvement in their funding position, according to the JLT Employee Benefits, which said recent changes to UK life expectancy could send schemes into surplus.
The company's monthly index found private sector pension funds were 98 per cent funded as at 30 September, compared with 93 per cent on the same date last year.
FTSE 100 pension schemes were found to be fully funded, compared with 96 per cent last year.
The index measures the funding level of schemes using the standard accounting measure (IAS19) used in company reports and accounts.
The research also showed that the deficit of all UK private sector DB schemes combined has fallen from £117bn to £37bn over the past year.
At the same time, FTSE 100 companies have cut their deficit to £2bn, down from £30bn in September 2017.
Charles Cowling, chief actuary at JLT Employee Benefits, said: "This has been a quiet month in markets with both the inflation outlook and long-term interest rates drifting slightly upwards.
"At the same time equity markets have held up well, despite continuing political uncertainty in Europe and the US. All of this means that pension scheme deficit positions are broadly unchanged."
He added: "Perhaps the news that will be of most interest to finance directors and shareholders is the recent announcement from the Office of National Statistics that life expectancy in the UK has stopped improving for the first time since their figures began in 1982.
"We estimate that 2018 could see pension liabilities reduce by over £40bn on account of the changing outlook for life expectancy, sending pension schemes soaring into surplus – at least as far as the numbers recorded in company accounts are concerned."
Figures published last week by the ONS suggested that life expectancy in the UK has stalled for the first time since 1982 when readings began.
Life expectancy at birth stood at 79.2 for a man and 82.9 for a woman in 2017. This marked a decline of 0.1 years between 2015 and 2017 for males and females in Scotland and Wales, and for males in Northern Ireland when compared with figures from 2014 to 2016. It remained unchanged for females in Northern Ireland and males and females in England.
Malcolm Mclean, senior policy consultant at Barnett Waddingham, said: "In some parts of the UK, life expectancy has actually decreased.
"It will be necessary to monitor developments in this area to establish that the apparent stalling in life expectancy is not simply a blip before we can be certain that the impact will be as significant for the future stability of DB provision as now appears to be the case."
Tom McPhail, head of policy at Hargreaves Lansdown, added: "We’ve seen some pretty wild swings in DB deficits in recent years, driven mainly by movements in the gilt markets, so I wouldn’t expect this one set of data on life expectancy to have a significant impact on scheme funding strategies.
"A minority of scheme sponsors, perhaps those with heavy deficit reduction programmes or with conservative life expectancy assumptions might look for some modest adjustment to their funding strategy.
"It wouldn’t take much of a shift in gilt yields, equity prices or in life expectancy data again to reverse any of the theoretical gains captured by this news."
