Jaime Norman, Senior Actuarial Director at Broadstone, said: “The final PPF 7800 update completes a relatively steady year for DB pension scheme funding in 2024 despite a small drop in funding levels. However, the year ended with a big spike in gilt yields with significant market volatility continuing into 2025. These movements could be good for schemes that are still poorly funded or with low levels of hedging, but it is likely to be unsettling for pension scheme members. 2025 looks set to be another turbulent yet across global markets amid increasing geopolitical risk and continuing macroeconomic uncertainty. The job for trustees will be managing investment risk and monitoring employer covenants to ensure the long-term security of member benefits. The insurance bulk purchase annuity market is likely to see significant demand from pension schemes again in 2025 as employers look to de-risk and as more entrants and superfunds offer increasing levels of choice.”
Alex Oakley, BPA Transaction Manager, at Standard Life, part of Phoenix Group: "Funding levels for UK defined benefit pension schemes remained steady in January. The aggregate section 179 funding ratio for the 5,050 schemes in the PPF 7800 Index remained at 125.7 per cent at the end of December, compared to 125.7 per cent at the end of November 2024. As we start a new year, scheme funding levels remain strong, with many finding themselves closer to buy-in or buy-out than anticipated, allowing them to consider locking in these strong positions. While 2025 has started with markets experiencing a surge in gilt yields, the impact on aggregate funding levels is less pronounced than when gilt yields rose in 2022 as many schemes have increased their hedging levels since then. In this busy market, trustees continue to focus on tailoring de-risking strategies to secure long-term objectives and capitalise on favourable funding positions, including safeguarding member benefits and preparing for end-game solutions, and insurers continue to play a crucial role in providing solutions to support schemes with their de-risking objectives.”
Vishal Makkar, Managing Director, UK Wealth Consulting at Gallagher, said: "The latest PPF 7800 Index highlights the ongoing funding strength of the UK’s defined benefit pension schemes, with the aggregate funding level staying at 125.7%, although market movements have reduced the values of assets, liabilities and the surplus all by around 4% over December. Today’s data aligns with the broader trend seen throughout 2024, where schemes maintained a healthy financial position, sparking renewed discussions about run-on strategies and surplus extraction. As we enter 2025, this strong foundation offers trustees an opportunity to build on recent progress and focus on long-term strategies to establish the best endgame option. The PPF’s updated methodology, which incorporates more granular data on asset allocation and cash flows, also provides a clearer picture of the sector’s health. Crucially, it reinforces that DB schemes are far more resilient than just a few years ago. Looking ahead, trustees should continue prioritising risk management, reducing volatility, and maintaining high-quality administration to protect members’ interests. With further pension policy changes expected in 2025 – including the second phase of the much-anticipated pensions review – it's clear that pensions will remain central to the government’s broader economic growth plans. Trustees must adapt to these developments while keeping their long-term objectives firmly in sight.”
Latest PPF 7800 Figures for December 2024
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