DB pension surplus rose by £47.9bn to close 2021 at £129.3bn

DB pension

The PPF revealed that the funding ratio also increased, from 104.6 per cent at the end of November 2021 to 107.7 per cent a month later

The aggregate defined benefit (DB) pension surplus increased by £47.9bn over December to close the year at £129.3bn on a section 179 basis, according to the Pension Protection Fund (PPF) 7800 Index.

The PPF revealed that the funding ratio also increased, from 104.6 per cent at the end of November 2021 to 107.7 per cent a month later.

According to the pensions lifeboat, the increased aggregate surplus was driven by a ‘significant’ rise in bond yields during December.

However, the PPF called for caution going forward due to the ongoing market volatility.

Over the month, assets dropped from £1,842.7bn to £1,818bn, although this was more than offset by liabilities decreasing from £1,761.3bn to £1,688.7bn during the same period.

Of the 5,215 DB schemes included in the index, 2,152 were in deficit and 3,063 were in surplus.

The aggregate deficit of the schemes in deficit at the end of December 2021 was £97bn, down from £125.9bn at the end of November.

Last month’s significant rise in bond yields saw the aggregate surplus of the 5,215 schemes we protect increase by £47.9bn to £129.3bn, said PPF chief finance officer and chief actuary, Lisa McCrory.

The rise in bond yields also means there are currently fewer schemes in deficit, with a reduced aggregate deficit of £97bn, she said.

She said: The unpredictable fluctuations in the 7800 funding ratio over the past few months are a clear sign of the ongoing market volatility and the need for caution.

Commenting on the findings, Buck UK head of retirement consulting, Vishal Makkar, said: As schemes begin their third year of the Covid pandemic, today’s figures suggest that markets have found some degree of stability and really have learned to live with the virus. Covid is still a potential source of volatility, as this latest Omicron spike has proved, but it’s no longer on the same scale as the initial impact it had in 2020.

He said: The next phase of the pandemic for pension schemes is likely to be shaped by the ongoing economic recovery from Covid.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Getting Money Wise. The information provided on Getting Money Wise is intended for informational purposes only. Getting Money Wise is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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