Pensions - Articles - Banking sector crisis increases scheme deficits in March


Low dependency funding for fully-hedged schemes was stable in March as hedging protected schemes against falling gilt yields. Half-hedged schemes suffer biggest monthly funding level fall since September 2022. Overall, schemes end Q1 2023 in a similar funding position to the end of 2022.

 The Broadstone Sirius Index – a monitor of how various pension scheme strategies are performing on their journeys to self-sufficiency – posts its latest update.

 The Broadstone Sirius Index found that falling gilt yields through March, arguably caused by the shifting view that central bank interest rate hikes will be less extreme due to the banking crisis, increased deficits in the schemes monitored, though the fully hedged scheme’s funding level remained relatively stable.

 Schemes that de-risked in the last quarter of 2022 will be seeing the fruits of this with the fully hedged scheme outperforming the half-hedged scheme for the first time since interest rates started to rise significantly last year.

 Gilt yields fell over the month of March and with growth assets remaining relatively flat, assets, liabilities and therefore deficits have increased. The combined impact of these changes was for our fully hedged scheme to maintain its position versus a deterioration in funding level for the 50% hedged scheme.

 Overall, both schemes end the quarter in deficit and in funding level terms in a similar state as they entered it.
 
 Marc Devereux, Head of Investment Consulting services at Broadstone reminded Trustees of the benefits of hedging and the importance of reviewing hedging levels.

 He commented: “March demonstrated the benefits of a hedged position, with those schemes that de-risked at the end of 2022 now benefiting from a more stable funding position.

 “However, the rapidly changing environment, which the recent market concerns over the banking system have exacerbated, highlights the importance of regular monitoring of hedging positions and funding levels. This enables Trustees to react quickly, if necessarily, to reposition their strategies and respond to potential opportunities.”
  

Back to Index


Similar News to this Story

Further comments on DWP Small Pots Consolidation report
Broadstone, Hymans Robertson, Scottish Widows and Now Pensions comment on the DWP announcement on consolidating small pension pots
Pensions over taxation bill continues to climb
Brits reclaimed £44 million in overtaxation on pension withdrawals in January, February and March 2025, the latest HMRC figures reveal. Over 15,000 re
Responses to DWPs Small Pots Delivery Group report
Standard Life, LCP and Aegon comment on the DWPs Small Pots Delivery Group report with proposed legislative programme outlined in meaning that pots wo

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.