The total surplus of the plans in the U.K.’s Pension Protection Fund 7800 Index increased to 473.6 billion pounds ($608.2 billion) in June from 468.8 billion pounds at the end of May, bringing the total value of their assets to more than 1.43 trillion pounds, compared with liabilities of 958.9 billion pounds.
The index encompasses 5,050 occupational defined benefit pension plans and defined benefit elements of hybrid plans.
Total plan assets rose 1.1% during the month and were up 6.3% from a year earlier, while liabilities also rose 1.1% compared with May and were up 4.5% from the end of June 2023. Among the plans in the index, 4,599 were in surplus, up from 4,574 at the end of May and 4,486 a year earlier, while 451 plans were in deficit, down from 476 a month earlier and 564 at the end of June 2023.
The less-than-5-billion-pound funding increase meant the funding ratio for the index remained relatively unchanged from the end of May at 149.4%.
The total surplus for the overfunded plans increased to 477.1 billion pounds from 472.4 billion pounds at the end of May and from 433.3 billion pounds a year earlier. The total deficit of the underfunded plans declined to 3.5 billion pounds from 3.6 billion pounds at the end of May but was up from 3.2 billion pounds at the end of June 2023.
“The story of the past month has largely been one of stability with the estimated funding ratio staying level with its position at the end of May,” said PPF Chief Actuary Shalin Bhagwan in a statement. “The primary driver behind the increase to both the liabilities and the assets was the small decrease to yields on fixed-interest gilts, after the Bank of England hinted that a cut in policy rates might be on the cards in August.”
Last month, when the Bank of England voted to keep interest rates at a 16-year high of 5.25%, it suggested it would consider cutting interest rates in August, noting that headline Consumer Prices Index inflation had retreated to its target rate of 2%. The bank stated it would “continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole,” including labor market conditions, wage growth and services price inflation.
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Tags: 7800 Index, Bank of England, fixed-interest gilts, June 2024, Pension Plans, Pension Protection Fund, Shalin Bhagwan, surplus, UK, yields