Defined benefit pension funding deficit remains at £460bn at September 2017


The funding deficit for defined benefit (DB) pension schemes in the UK remained at £460 billion at the end of September 2017, according to research by PricewaterhouseCoopers (PWC).

Its Skyval index, which is based on data relating to 5,800 DB pension funds and collected through the Skyval pensions platform used by trustees, sponsors and advisors, found that the funding deficit for UK DB pension schemes has been maintained at the same level between August 2017 and September 2017.

At the end of September 2017, pension assets were £1,520 billion according to the current funding measure, which is used by pension fund trustees to determine organisations’ cash contributions. This is a £50 billion decrease from the £1,570 billion recorded in August 2017.

The current funding measure liability target at the end of September 2017 was £1,980 billion, compared to £2,030 billion at the end of August 2017.

Steven Dicker, chief actuary at PWC, said: “Long-term real interest rates, interest rates relative to inflation, as measured by government bond yields have increased over September, which has led to a £50 billion reduction to liabilities since August month end. However, there was no impact on the deficit due to falling asset values over the month.

“The swing in the size of deficit from month to month is sensitive to small market movements, as demonstrated by the month to month volatility.”