UK Corporate Pension Funding Falls in July

The combined deficit for the 5,422 UK defined benefit (DB) pension plans tracked by the Pension Protection Fund’s PPF 7800 index ballooned by £24.7 billion in July to £199.5 billion ($260.4 billion) from £174.8 billion at the end of June. The deficit has more than tripled during the past year from £62 billion as of the end of July 2019.

As a result of the increased deficit, the funded ratio for the plans declined during the month to 89.9% from 91%, and is down from 96.5% at the same time last year.

The aggregate asset value of the plans in the index totaled £1.775 trillion at the end of July, down £500 million from the end of June, but up £84 billion from the end of July 2019. Meanwhile, the total liabilities for the plan were £1.975 trillion at the end of July, up from £1.950 trillion at the end of June, and up from £1.753 trillion during the year-ago month.

The number of plans in the index that were in surplus fell to 1,737 at the end of July, which accounted for 32% of the plans, from 1,805 at the end of June, which accounted for 33.3% of the plans. At the same time last year, there were 2,197 plans in surplus, or 40.5% of the plans in the index. The total surplus of the plans in surplus decreased to £106.9 billion as of the end of July from £113.2 billion at the end of June, and from £133 billion at the end of July 2019.

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And the number of plans in deficit at the end of July rose to 3,685, or 68% of the plans in the index, from 3,617 plans in deficit at the end of June, or 66.7% of the plans. During the year-ago month, there were 3,225 plans in deficit, or 59.5% of the plans in the index. The aggregate deficit of all plans in deficit at the end of July rose to an estimated £306.4 billion from £288 billion at the end of June, and from £195 billion at the same time last year.