UK - Increases in asset values and higher gilt yields improved the aggregate funding position of UK defined benefit (DB) schemes by almost £25bn (€26.7bn) to leave deficits at £148.9bn at the end of September, according to the Pension Protection Fund (PPF).

Latest figures from the PPF 7,800 Index revealed the number of DB schemes in surplus increased to 1,204 in September, from 1,077 in August, while the total surplus of the schemes in surplus amounted to £25.9bn, up from £21.4bn the previous month.

The monthly update on around 7,400 DB schemes showed the overall funding position had jumped from a deficit of £173.2bn to £148.9bn in a month, although this is still almost three times worse than the aggregate deficit of £52.2bn recorded in September 2008.

Data from the PPF Index said while 84% of schemes are in deficit, the actual number dropped from 6,304 to 6,174, while the total deficit of these schemes slipped from £194.6bn to £174.9bn. 

Total scheme assets among the 7,400 schemes totalled £858.8bn, a monthly rise of 2.7%, and an increase of 6.6% over the year to 30 September 2009, while scheme liabilities increased 17.5% over the year but dropped 0.2% in the last month.
The PPF Index attributed the improvement in the funding position to a 2.6% increase in assets following rises in UK and global equities, while higher gilt yields reduced liabilities by around 0.5%.

Elsewhere, Hymans Robertson's quarterly penSAFE report on the funding status of the FTSE 350 pension schemes suggested:

The total deficit fell by £10bn over the quarter to £177bn following strong equity returns. IAS19 deficits increased by £28bn to £125bn because of a reduction in AA rated corporate bond yields A typical FTSE350 company has around 25% of its market value exposed to un-hedged risks in its DB pension scheme

Mercer's quarterly pension update on the FTSE350 DB pension schemes revealed:

FTSE350 aggregate pension deficit increased to £140bn despite equity market rally, which is equivalent to an aggregate funding level of 77 percent The deficits increased because credit spreads are starting to fall back from record highs towards more normal levels If credit spreads revert to historical levels, without further market recovery, this could increase deficits by a further £60bn

Aon Consulting's Aon200 Index, which tracks the funding position of the 200 largest UK privately-sponsored pension schemes, claimed:

The aggregate deficit was reduced by 20%, or £16bn, during September from £78bn to £62bn Abnormal market conditions, which have "wreaked havoc on liabilities", are now clearing and companies can plan for the future

Figures from Towers Perrin on the deficits in FTSE 100 pension funds at the end of September claimed:

Equity markets rose by 9.9% since August helping the combined pension deficit of the FTSE 100 to drop from £78bn to £58bn But it warned schemes should take steps to lock in some of the equity performance and de-risk in case share values drop again in a ‘double-dip' effect

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