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 5,050 schemes in the PPF 7800 Index is estimated to have increased over the month to £428.2 billion at the end of December 2023, from a surplus of £425.5 billion at the end of November 2023.
• The funding ratio decreased from 145.7 per cent at the end of November 2023 to 142.8 per cent.
• Total assets were £1,428.2 billion and total liabilities were £1,000.0 billion.
• There were 582 schemes in deficit and 4,468 schemes in surplus.
• The deficit of the schemes in deficit at the end of December 2023 was £3.7 billion, down from £4.1 billion at the end of November 2023.
Shalin Bhagwan, PPF Chief Actuary said: “Over the last month the most notable change in the latest estimated funding position for DB pension schemes was liabilities increasing by 7.4 percent and assets increasing by 5.3 per cent. This was the result of government bond yields falling sharply in December as global inflation took a downward turn and central bank communication, in particular from the Federal Reserve and European Central Bank, validated market expectations that rate cuts are coming in 2024, giving the markets the opportunity to price those rate cuts coming earlier and more sharply.
“The fall in government bond yields caused the value of both hedging assets and liabilities to rise. The rise in scheme asset values wasn’t enough to keep pace with the rise in liability values, meaning that funding ratios saw a small deterioration. This once again highlights the increased risk to aggregate funding levels from persistently higher volatility in interest rate markets.”
View the January update and see the supporting data on the 7800 Index for 31 December 2023 here: The PPF 7800 index | Pension Protection Fund.
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