U.K.’s PPF 7800 pension funding ratio dips slightly in October

The funding ratio of U.K. defined benefit funds covered by the Pension Protection Fund’s 7800 index dipped slightly in October, decreasing to 133.6% from 134.8% at the end of September.

Still, the aggregate surplus increased to £374.7 billion ($435 billion) in October, up from £374.5 billion the previous month. The surplus in October 2021 was £114.5 billion.

Lisa McCrory, the PPF’s chief finance officer and chief actuary, said in a news release that the volatility causing liability values to increase by about 3% was offset by increases in asset values.

“Pension schemes in aggregate therefore remain in a much better position compared with this time last year,” Ms. McCrory said in the news release. “It’s important that trustees and sponsors reflect on what this higher rate and inflationary environment means for their funding and investment strategy going forward.”

The PPF is the lifeboat fund for defined benefit plans of insolvent U.K. companies. It covers 5,215 pension funds, of which 756 are in deficit and 4,459 are in surplus.

The aggregate deficit of pension funds reporting a shortfall grew to £5.8 billion in October from £5.3 billion at the end of September. For pension funds in surplus, the aggregate surplus increased to £380.5 billion from £379.8 billion at the end of September, and from £217.9 billion at the end of October 2021.

Pension fund assets totaled £1.49 trillion at the end of October, an increase of 2.7% from the previous month and a decrease of 17.4% from October 2021.

Total liabilities of £1.12 trillion were an increase of 3.7% over the month and a decrease of 34% over the year.

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