These updates will impact the Index, and our calculations show the combined effect of these changes has caused the funding level of the defined benefit scheme universe to increase by 7.3 percentage points to 100.9 per cent at the end of November 2018, compared with 93.6 per cent reported at the end of October. An increase of 5.1 percentage points taking account of the new version (A9) of the actuarial assumptions for s179 valuations, and an increase of 2.3 percentage points due to moving to the new Purple Book 2018 dataset. There was a further decrease of 0.1 percentage points because of market movements over the month of November – an overall increase in gilt yields led to decreases in liability values of 0.3 per cent and assets of 0.5 per cent, the latter including a slight offset for an increase in overseas equity prices.
While the aggregate funding position of the 5,450 schemes improved and stood at a surplus of £14.3bn at the end of November, there is still significant risk in the PPF eligible universe with 3,008 schemes remaining in deficit, with a combined deficit of £137.6bn.
PPF 7800 Index
This update provides the latest estimated funding position, on a section 179 (s179) basis, for the defined benefit pension schemes potentially eligible for entry to the Pension Protection Fund (PPF). A scheme’ss179 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 maybe lower than full scheme benefits.
This month there are two updates in the way the PPF 7800 Index is calculated:
• We are moving to the new Purple Book 2018 dataset, re-stating the funding position from March 2018 to October 2018 to reflect the new data. The impact as at 31 October 2018 is an increase in the funding level of 2.3 percentage points (see note 8 on page 8).
• The PPF 7800 Index for end-November takes account of the new version (A9) of the actuarial assumptions for s179 valuations, introduced with effect from 1 November2018. The impact of the change was a further increase of the funding level by 5.1percentage points (see note 4 on page 7).
For more information on the impact of the changes on the PPF 7800 Index, please see note 1 on page 7. All the charts and tables presented in this publication have been revised to reflect the changes described above.
Highlights
• The aggregate funding position of the 5,450 schemes in the PPF 7800 Index is estimated to have improved over the month to a surplus of £14.3 billion at the end of November 2018, from a deficit of £67.2 billion at the end of October 2018.
• The funding level increased from 95.9 per cent at the end of October 2018 to 100.9 per cent.
• Total assets were £1,580.3 billion and total liabilities were £1,566.0 billion.
• There were 3,008 schemes in deficit and 2,442 schemes in surplus.
To view the full supporting data please click here
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