Funding among the UK’s defined benefit (DB) funds rose towards the end of the financial year, as the aggregate deficit reported by the Pension Protection Fund (PPF) fell to £302bn (€384bn).

Overall funding levels stood at 81% at the end of last month, according to the PPF 7800 Index, while the deficit across the 5,945 schemes captured fell by £20bn compared with February.

However, despite the improved ratio, funding remained down compared with March 2015, when it stood at 84.2%, accounting for a deficit of £244bn.

Andy Tunningley, head of strategic clients at BlackRock in the UK, noted that March had been a “positive month” for the sector.

“UK pension scheme assets benefited from positive equity and credit returns this month, though this was partly offset by an increase in liabilities as inflation expectations rose,” he said.

“Though March was generally positive for markets as central bank action, positive economic data and rising oil prices bolstered investor sentiment, clouds remain on the horizon – most noticeably the prospect of market volatility in the event of a ‘Brexit’, which extended sterling’s weakening against the euro in March.”

At the end of March, the PPF 7800 universe covered schemes with liabilities of £1.59trn, slightly down by £5.5bn compared with February.

In other news, a working group founded by leading employer covenant advisers has published a list of principles to guide stakeholders during the valuation of defined benefit funds.

The Employer Covenant Working Group (ECWG) said the publication of its principles was necessitated as The Pensions Regulator (TPR) “consistently raised the bar” on what was expected of trustees and employers, while individual advisers had developed their own approach to valuing covenant strength.

“With this in mind,” a statement said, “the ECWG has been formed to address the need for greater consistency, recognised leading practice and improved standards in covenant advisory work.”

Gary Squires, chair of the ECWG, noted that employers would not want to risk schemes becoming reliant on the PPF.

“Given the scale of the challenge, it’s clear there is a need for a consistent approach to addressing funding deficits, and the members of the ECWG’s work assisting trustees, scheme sponsors and regulators in considering an employer’s ability to pay contributions into the future is vitally important to help secure the retirement of millions of people.”

The principles detail a sponsor’s legal obligation, how to best value a scheme’s position and how to assess a sponsor’s ability to support a fund, among other areas.

Finally, Willis Towers Watson has developed a new longevity model to improve the accuracy of assumptions by drawing on medical data, better predicting how many pension fund members will go on to develop diabetes, for example.

PulseModel was designed as the consultancy was concerned mortality models failed to incorporate medical information, Matthew Edwards, head of mortality at Willis Towers Watson, said.

James Brown, lecturer in ageing metabolism at the Aston Research centre for Healthy Ageing in Birmingham, said the emergence of type 2 diabetes was “one of the gravest health issues” for the coming century.

“This model represents a potential step-change in our ability to accurately predict outcomes based upon the likely future trends in diabetes incidence,” he said.

“More importantly, it provides quantifiable predictions of the potentially dramatic implications diabetes might have on mortality and life expectancy.”