The aggregate surplus of UK pension schemes against long-term funding targets remained extremely positive at £189bn at the end of June, up £26bn compared to the end of June 2024.
Funding levels of UK DB pension schemes stayed strong over the month, according to new analysis from XPS Group.
It estimated that aggregate scheme assets marginally increased over June, as growth assets experienced positive returns, along with matching assets increasing in line with liabilities.
Aggregate scheme liabilities increased slightly, driven by decreases in gilt yields, XPS said.
Since June 2024, UK pension schemes’ funding positions have improved compared to long-term funding targets.
With assets totalling £1,151bn and liabilities of £962bn, the aggregate funding level of UK pension schemes, on a long-term funding target basis, remains positive at 120% of the long-term value of liabilities. That represents an increase of 4% over the past year.
The figures come as trustees and employers unpacked major announcements including the Pension Schemes Bill, the Government’s response to the DWP consultation on “Options for Defined Benefit Schemes”, and guidance from the Pensions Regulator on endgame options.
Trustees and employers are now revisiting long-term objectives and assessing what opportunities are available to improve outcomes for stakeholders, as they plan how to reach their chosen endgame. For example, a recent XPS Group poll found that 76% of trustees are more likely to adopt the new statutory override to give themselves the power to distribute surplus.
Jill Fletcher, senior consultant at XPS Group said: “Many DB schemes are now fully funded on or above their long-term funding basis and are considering their objectives and strategy for reaching that endgame.
“While for some schemes the objective will continue to be working towards insuring benefits through buy-in or buy-out, the potential to run-on a scheme and make use of the recently announced surplus flexibilities may now be a more attractive and feasible option for others.”