The aggregate deficit of the 5,450 defined benefit pension schemes in the Pension Protection Fund 7800 Index rose by £63.5bn in May.
This meant the shortfall increased from £6.4bn in April to £69.9bn at the end of the following month, largely due to a poorer performance in equity markets.
Meanwhile the funding ratio fell from 99.6 per cent to 96 per cent.
At the end of May, the total assets in DB schemes were £1.66trn, while total liabilities were £1.73trn.
There were 3,382 schemes in deficit and 2,068 schemes in surplus, the PPF stated.
According to Sion Cole, BlackRock’s head of distribution for the UK for fiduciary management, UK pension scheme trustees may have been reminded of the risks of being complacent when things are going well.
He said: "Having ended April on a high note, the PPF 7800 index dropped back over May, conceding 3.6 per cent in funding level terms to finish at 96 per cent.
"Entering May at all-time highs, cheap wickets were lost as equity markets reacted negatively to expectations of increased US tariffs on China and Mexico, falling 3-5 per cent over the month. Bonds rallied, so total scheme assets rose slightly, but this was not enough to prevent funding levels from dropping."
Mr Cole noted that these market moves "serve as a reminder that unusually low levels of market volatility may not accurately reflect the risks in this late-cycle period".
He added: "Continuing to chase runs with a high-risk approach could land schemes in trouble, losing ground at a vital time.
"We continue to see schemes approaching the endgame which haven’t thought about their strategy for the final few overs of the chase. A more gung-ho approach may be ok if you have a strong sponsor to back you; for most schemes, keeping a cool head may be more suitable."
Other DB scheme indices also showed a hike in pension shortfalls.
The PwC Skyval Index – which provides an aggregate health check of the UK’s 5,450 corporate DB pension funds, based on the 'gilts plus' method widely used by scheme actuaries – showed an increase of £60bn in these schemes' deficits, to £240bn at the end of May.
Steven Dicker, PwC’s chief actuary, said: "The increase in the deficit has largely been driven by a fall in the yields on government bonds while assets have stayed flat.
"This further illustrates how continuing economic uncertainty, particularly surrounding the future direction of long-term interest rates, leads to unhelpful volatility in pension funding levels on this measure."
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