The combined deficits of 6,057 private sector defined benefit (DB) schemes have increased to their highest point since March, according to figures by the Pension Protection Fund (PPF).
The monthly PPF7800 Index showed the overall deficit, calculated on schemes’ ability to provide PPF-level benefits, was £280.4bn at the end of August.
This is a rise of 10.3% from the end of July, when deficits stood at £254.2bn, and the highest point since the end of March, when it was £292.6bn.
As a result, average funding levels dropped to 81.6%, with 4,998 schemes operating a deficit.
Over the year, the deficit has nearly doubled from the £151.6bn seen in August 2014, while funding levels have fallen by more than 6 percentage points.
The PPF said total assets fell 2% over the month of August to £1.24trn, while liabilities remained relatively stagnant at £1.52trn.
The UK’s lifeboat fund said, due to the weighting of schemes towards equities and volatility, the 6% fall in the FTSE All-Share Index was behind the drop in assets, while liabilities – driven by Gilt yields – remained flat after a 1-basis-point fall in 15-year bonds.
In other news, the £120m Shop Direct Group Limited Pension Plan has appointed Towers Watson as fiduciary manager.
The consultancy will now take over the investment portfolio and manage assets and liabilities as the scheme targets full-funding.
CIO John Ashworth said the trustees had taken into account the expertise, time and level of resource needed to manage the scheme and concluded that delegating investment strategy to Towers Watson was a more “flexible and effective” method.
“We now have governance structures in place we are confident will deliver investment performance goals and risk management in the best interests of all our members,” he added.
Research published this week by fellow consultancy and fiduciary management provider Aon Hewitt found that the number of schemes larger than £1bn using fiduciary managers had doubled over the last year.
The consultancy’s survey found that just over half of funds with more than £1bn in assets were using either full or partially delegated fiduciary mandates.