The funding levels of UK’s private pension plans bounced back in September after falling in August, according to the latest monthly fund index report from JLT Employee Benefits.
“Despite concerns over rising inflation; despite many market worries and woes, the funding position of [defined benefit] pension schemes is showing signs of positive improvement, after a traumatic few years,” said Charles Cowling, Director, JLT Employee Benefits.
According to JLT’s most recent monthly index, UK private-sector pension plans have seen their funding levels rise to 90% from 82% the previous month, exceeding an 83% funding level reported at the close of September 2016.
Although the aggregate asset value of UK private pension plans fell £48 billion during the month to £1.558 trillion, the plans’ total liabilities fell even further, declining £68 billion to £1.737 trillion. Compared to September of 2016, UK fund’s aggregate assets rose by £20 to £1.872 trillion, while liabilities fell by £115 billion £1.737 trillion.
Regarding the pension plans of FTSE 100 companies, assets fell £21 billion during September to £685 billion, while their liabilities fell £29 billion to £711 billion from £740 billion the previous month. Compared to last year, assets of the FTSE 100 companies gained £13 billion from £651 billion, while liabilities fell £15 billion from £755 billion in September of 2016. The funding level of the FTSE 100 pension plans remained flat to the previous month at 93%, representing a seven-percentage-point increase from an 86% funding level reported the same time last year.
Meanwhile, the pension plan assets of the FTSE 350 companies fell £25 billion to £749 billion in September from from £774 billion the previous month, while their liabilities declined £34 billion to £808 billion. Compared to September of 2016, the FTSE 350 pension plan assets gained £11 billion from £738 billion, while their liabilities declined £53 billion from £861billion. The funding level of the FTSE 350 companies edged one percentage higher to 93% from 92% the previous month, and gained seven percentage points versus the close of September 2016.
In September, the total deficit of all UK private pension plans fell £20 billion from August to £179 billion, representing a £135 billion plunge from £314 billion in September of 2016. The FTSE 100 pension plans’ deficit fell £8 billion to £47 billion from £55 billion the previous month, and was down £57 billion from £104 billion for the same month the previous year. The FTSE 350 pension plans’ deficit fell £9 billion to £59 billion from £68 billion in August, and declined £57 billion from £104 billion in September 2016.
“The total deficit in the pension schemes of FTSE100 companies is back below £50 billion and showing signs of heading even lower,” Cowling said. “This good news comes on the back of equity markets holding up well.”
Tags: JLT Employee Benefits, Pension, Private Sector Pension, UK