Vishal Makkar, Head of Retirement Consulting at Buck in the UK comments: “August’s data again showed that the funding position for the DB schemes in the PPF index remains healthy. Despite some movement in yields and asset returns, the aggregate position stayed comfortably in surplus, with a funding ratio of 104.7%.
“There might, however, be trouble on the horizon for both scheme members and sponsors later this year. The planned end of a number of government support schemes, including furlough, is imminent and looks set to coincide with the move into winter that prompted UK-wide lockdowns last year. While the vaccination landscape is now very different, scheme sponsors will still be keen to avoid any further business disruption and the return of the volatility the markets experienced in 2020. Sponsors in certain sectors may also have concerns about their supply chains, as stories of empty shelves at UK supermarkets and a lack of trained lorry drivers continue to emerge.
“Any impact on funding levels due to changes to sponsor covenants or investment markets may not be felt for some time yet. Still, scheme trustees should use the autumn well to prepare as best they can for any potential impact on their members or sponsors.”
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