The combined deficit of more than 6,000 UK defined benefit (DB) schemes has fallen below £30bn (€36.1bn) for first time since June 2011.

Research conducted by the Pension Protection Fund (PPF) showed deficits at the end December were now £27.6bn, having fallen by £32bn over the month.

The lifeboat fund’s monthly 7800 Index produces figures on an s179 basis, which calculate the funding ability of schemes to provide PPF level benefits.

Its statement showed 2013 to be a record year in the reduction of deficits, which fell from £221.2bn to £27.6bn.

The lion’s share of the reduction came in the latter half of the year after a peak in deficits at the end of April, which hit £231.2bn.

The dramatic change in funding levels came on the back of shrinking liabilities, led by the rise in government bond yields.

Over the year, liabilities for the 6,150 schemes fell by £125.6bn to £1.16trn, well below the April peak of £1.36trn.

Asset values rose by £68bn during a growth year for UK equities, as the FTSE All-Share index went up 16.7%, hitting £1.13trn. This was below the October peak of £1.14trn.

However, the yield on 10-year UK government bonds, which saw significant rises after April, started 2013 less than 1 basis point below 2%.

By the end of the year, the yield reached just over 3%, resulting in the downward pressure on liabilities.

Over December alone, the yield rose by 20bps, accounting for more than 99% of the £32bn drop in deficits seen in the month.

Throughout the year, yields fluctuated, reaching a high of 3.083% on 27 December and a low of 1.61% on 2 May.

The PPF said, as a result of the fall in liabilities, average funding ratios hit 97.6% compared with 82.8% a year previous, as more than 1,000 schemes moved from deficit to surplus.