A scheme’s s179 liabilities represent, broadly speaking, the premium that would have to be paid to an insurance company to take on the payment of PPF levels of compensation. This compensation may be lower than full scheme benefits.
Highlights
• The aggregate surplus of the 5,131 schemes in the PPF 7800 Index is estimated to have increased over the month to £446.9 billion at the end of September 2023, from a surplus of £441.1 billion at the end of August 2023.
• The funding ratio increased from 146.2 per cent at the end of August 2023 to 147.5 per cent.
• Total assets were £1,387.5 billion and total liabilities were £940.6 billion.
• There were 461 schemes in deficit and 4,670 schemes in surplus.
• The deficit of the schemes in deficit at the end of September 2023 was £2.2 billion, down from £2.3 billion at the end of August 2023.
Shalin Bhagwan, PPF Chief Actuary said: “Over the past month we’ve seen estimated aggregate funding levels improve, with an increase of over £5 billion recorded at the end of September, while the funding ratio increased by over a percentage point to 147.5 per cent. This was due to a sharp rise in yields which meant that the fall in liabilities outpaced the fall in assets. Yields in long-dated gilts rose alongside other global government bonds as markets price in rates remaining higher for longer and the impact of elevated government borrowing globally starts to impact term premium.
Improved funding levels across the universe will bring end-game planning into sharper focus for many schemes, something that is already reflected in the buyout market, which is on track for a record year. Whilst the market, in its current state, appears to be conducive for innovation and attracting new entrants, buyout may not be an appropriate or achievable end-game for a significant number of DB pension schemes.”
View the October update and see the supporting data on the 7800 Index for 30 September 2023 here: The PPF 7800 index | Pension Protection Fund .
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