Vishal Makkar, Head of Retirement Consulting at Buck in the UK comments: “The aggregate position of the schemes in the PPF Index remained in surplus during June, a clear contrast to the £174.8 billion deficit they faced this time last year. The improvement in funding positions reflects both the changes in the PPF’s actuarial assumptions as well as the more positive economic outlook for the country, which has followed the rollout of the UK’s vaccine programme.
“There is, however, still a great deal of uncertainty for scheme sponsors and particularly those in industries such as travel, hospitality and the charity sector. The outlook for both sponsors and members in these industries could well worsen again if coronavirus cases continue to rise in the UK, leading to a return to any lockdown measures.”
Sion Cole, Head of UK Fiduciary Business at BlackRock, said: “It is reassuring to see the continued growth in pension scheme funding ratios, with a 0.2% rise over June. This continued steady momentum is an indicator that markets have stabilized following last year’s volatility and that pension schemes continue to bolster their funding levels.
“The broadening economic restart, coupled with global central banks’ resolve to maintain easy financial conditions, keeps us moderately pro-risk. We favour equities over credit and government bonds on both a strategic and tactical investment horizon. We see the US and UK leading the developed world’s economic restart – with the euro area catching up - powered by pent-up demand and sky-high excess savings. The huge growth spurt will be transitory, in our view. This is because a restart is not a recovery: the more activity restarts now, the less there will be to restart later.”
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