Home > News > Research > UK DB Pensions Increase to 97.7% Funded
Research

UK DB Pensions Increase to 97.7% Funded

Aggregate deficit of nearly 5,600 plans plunges more than 65% in August.

By Michael Katz

The aggregate deficit of the 5,588 pension plans in the Pension Protection Fund’s PPF 7800 Index has fallen to £38.7 billion ($51.1 billion) at the end of September, from £65.3 billion at the end of August, raising the funding level to 97.7% from 96.1% a month ago, and from 94.2% at the same time last year.

The PPF said the number of plans in deficit decreased to 3,437, representing 61.5% of all the plans, down from 3,562 plans, or 63.7%, at the end of August, and from 3,698 plans, or 66.2%, at the end of September 2017. It also said the number of plans in surplus increased to 2,151, or 38.5% of all the plans, from 2,026 (36.3%) at the end of August, and 1,890 plans (33.8%) at the same time last year.

The total surplus of the plans that were in surplus increased to £131.6 billion from £123.2 billion at the end of August, and from £104.7 billion at the end of September 2017. Meanwhile, the aggregate deficit of all plans in deficit decreased to £170.3 billion from £188.5 billion at the end of August, and £200.5 billion at the end of September 2017.

Liabilities decreased 2.3% during September, while conventional 10-, 15- and 20-year gilt yields rose by 15 basis points, 14 basis points, and 14 basis points, respectively, and index-linked 5-15 year gilt yields rose by 9 basis points. Assets decreased 0.8% due to the impact of lower bond prices.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

And for the year to September, conventional 10- and 15-year gilt yields were up 17 basis points, and 4 basis points, respectively, while 20-year gilt yields were down 1 basis point, and index-linked 5-15 year gilt yields were up 11 basis points. The FTSE AllShare Index was rose 1.1%, and the FTSE All-World Index was up 7.6% during the same period.

According to the PPF, equity markets and gilt yields are the main drivers of funding levels, and liabilities are sensitive to the yields available on conventional and index-linked gilts. Liabilities are also considered time-sensitive because even if gilt yields were unchanged, plan liabilities would still increase as the point of payment approaches.

Tags: , , ,

Home > News > Alternatives > Tourbillion Joins Highfields, Criterion Capital in Recent Hedge Fund Closures
Alternatives

Tourbillion Joins Highfields, Criterion Capital in Recent Hedge Fund Closures

Struggling firm’s founder said the fund had ‘recently not delivered’ expected results, and will return more than $1 billion by year-end.

By Chris Butera

A third hedge fund has ceased operations within a week due to lackluster returns, The Wall Street Journal reports.

Tourbillion Capital Partners joins Highfields Capital and Criterion Capital Management’s shutdowns. It will refund the money to its clients and stop its main fund, the firm said in a Monday email.

The firm had $4 billion in assets in 2016, but had been struggling for some time. Its flagship fund was down 3.2% this year, and assets sank this year to about $2 billion, according to the Journal.

Tourbillion opened in 2013, returning 21% that year. Its returns were positive through 2015, but began to decline in 2016. It lost 13.8% last year, the publication’s sources said.

For more stories like this, sign up for the CIO Alert newsletter.

In the letter, Tourbillion’s founder, Jason Karp, told clients the fund had “recently not delivered the results that you expect of us and what we know we are capable of.” Its main fund is expected to return more than $1 billion in client money by the end of the year.

Karp and other senior members of the firm will continue to invest in stocks, but in a “radically different unconstrained manner,” the letter said, that would “allow us to focus only on our highest conviction ideas.”

As hedge funds struggle to perform, they must reevaluate their businesses. Some close, while others reduce their fees, which have come under criticisms from pension funds and other institutional investors in recent years.

Despite these closings, more hedge funds have launched in the first half of 2018. Industry index Hedge Fund Research reported 270 closures and 306 openings. At the end of the second quarter, the index reported 8,413 hedge funds in existence.

Tags: , ,

«