12/05/2022 | Press release | Distributed by Public on 12/05/2022 07:29
Pension scheme funding levels hold firm as markets stabilise
05 Dec 2022
UK pension schemes' funding positions have fallen by c.£13bn over the month to 29 November 2022 against long-term funding targets, an analysis from XPS's DB:UK funding tracker has revealed. Based on assets of £1,559bn and liabilities of £1,485bn, the aggregate funding level of UK pension schemes on a long-term target basis was 105% as of 29 November 2022.
Following a period of significant volatility in the gilt market during September and October, yields stabilised during November as nominal gilt yields ended the month down 0.4%, while long-term inflation expectations continued to fall.
Tom Birkin, Actuary at XPS Pensions Group said: "Following the unprecedented market turmoil and collateral call issues we've seen over the previous two months, November was a much-needed period of relative calm for pension schemes.
Many pension schemes remain in a very healthy position and should be exploring options to de-risk and lock in some of the gains made during 2022, including full or partial buy-ins. With the bulk annuity market getting busier and some insurers becoming more selective, it's important for schemes to prepare well before any market approach."
Notes
XPS DB:UK tracks the funding position of UK defined benefit (DB) pension schemes on a long-term target basis and allows real time monitoring of changes and analysis of the reasons behind any movement.
XPS DB:UK Funding Watch monitors the combined deficit and funding level of UK defined benefit (DB) pension schemes (i.e. all registrable schemes - including hybrids) on a long-term target basis using a discount rate of Gilts + 0.5%. It combines XPS's market leading Member Analytics and the award-winning journey planning tool, Radar, enabling real time monitoring of changes and analysis of the reasons behind any movement.
An online version of XPS DB:UK is available here:https://www.xpsgroup.com/services/xps-pensions/xps-dbuk-funding-watch/