Aggregate scheme assets decreased slightly over August 2024, following a sharp decline in equity markets during the first week of August, which gradually recovered throughout the month. Aggregate scheme liabilities also decreased slightly, driven by a fall in future inflation expectations.
Over August 2024, UK pension schemes’ funding positions remained stable relative to long-term funding targets, according to new research from XPS Group. With assets totalling £1,462bn and liabilities of £1,286bn, the aggregate funding level of UK pension schemes on a long-term target basis remains extremely positive at 114% of the long-term value of liabilities, as of 29 August 2024.
Henry Shore, Senior Consultant at XPS Group, said: “Despite investment market volatility over the month, aggregate pension scheme surpluses have remained stable and continue to be at record levels.
On the 29th of July 2024, the final draft of the Pension Regulator’s new DB funding code was presented in Parliament, providing trustees and sponsors with greater clarity on how the new Funding and Investment Strategy Regulations will be implemented.
With many DB pension schemes now fully funded on or above their long-term funding basis, the new funding code provides clearer guidance on how schemes can strategically invest surplus assets in excess of their long-term objectives. These options include greater freedom to invest in growth assets, which may support trustee plans to provide future discretionary benefits, or any sponsor plans to utilise surplus assets elsewhere in their business.”
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