The funding level of the 5,588 pension plans in the Pension Protection Fund’s (PPF) PPF 7800 Index dropped to 95.6% at the end of February from 96.9% at end of January, according to the UK’s pension lifeboat for collapsed companies.
The lower funded level was a result of the aggregate deficit rising £21.1 billion to £72.1 billion during the month. Total assets were £1.568 trillion ($2.2 trillion), while total liabilities were £1.64 trillion. There were 3,608 plans in deficit, and 1,980 plans with a surplus.
Although the funded levels dropped from the end of January, they were up sharply from February 2017, when the index reported a deficit of £242 billion, and a funding level of 86.2%. Total plan assets were down 0.5% from the end of January, but were up 3.7% from the same time last year. Meanwhile, total plan liabilities rose 0.8% during February, but were down 6.5% from the end of February 2017.
Among the plans that were in deficit, the aggregate deficit at the end of February increased to £187.6 billion from £174.2 billion at the end of January, but was down 39% from the year-ago month when the group’s combined deficit totaled £307.4 billion. Meanwhile, the total surplus of plans that were in surplus fell to £115.5 billion from £123.2 billion at the end of January 2018, but was up 89% from the end of February 2017 when the total surplus was £65.3 billion.
The number of plans in deficit at the end of February increased to 3,608, representing 64.6% of all plans in the index, from 3,493 at the end of January (62.5%), and compared to 4,380 plans in deficit at the end of February 2017 (75.6%). At the same time, the number of plans in surplus decreased to 1,980 at the end of February (35.4%) from 2,095 at the end of January (37.5%), but was up 40% from 1,414 (24.4%) plans in surplus at the same time last year.
According to the PPF, liabilities increased 0.8% during February, as conventional 15-year gilt yields rose by 1 basis point, while index-linked 5-15 year gilt yields fell by 10 basis points. Assets decreased by 0.5% during the month as a result of the impact of lower equity prices. Compared to the February of last year, 15-year gilt yields were up by 25 basis points, index-linked 5-15 year gilt yields were up by 43 basis points, and the FTSE All-Share Index was up 0.7%. Equity markets and gilt yields are the main drivers of funding levels.