Nine in 10 UK DB schemes are now in deficit

UK - Over 90% of UK defined benefit (DB) schemes are underfunded, as the aggregate funding position of almost 7,800 schemes reported a deficit of £218.7bn (€237.3bn) at the end of February.

Figures from the Pension Protection Fund’s (PPF) 7800 Index showed the number of schemes in deficit last month increased from 6,924 to 7,017 - equivalent to 91% of the sample - leaving just 716 pension funds in surplus.

The monthly update from the PPF revealed the total funding position of the index worsened by around £28bn, from £190.6bn at the end of January to £218.7bn a month later, with the total deficit of the schemes in deficit reaching £228.1bn.

This is more than double the £109.6bn deficit reported in February 2008, when the aggregate funding position was also much lower with a deficit of just £67.1bn, while the total surplus of the 716 schemes in surplus fell to £9.4bn in February 2009 from £13.5bn the previous month.

Data from the PPF Index also showed the total value of scheme assets within the 7,800 schemes fell 4.2% in February to £693.9bn, resulting in a fall of 16.4% in asset value over the year.

However, while the total scheme liabilities increased 1.7% to £912.7bn, in the 12 months to February, the figures showed the value of the liabilities actually decreased slightly, by 0.2%, in the last month from £914.7bn in January 2009.

The continued decline in the overall funding position was partly attributed to a 4.7% fall in assets in February as a result of falling UK and global equities, as the FTSE All-Share Index reported a 7.2% drop over the month.

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