Jaime Norman, Senior Actuarial Director at Broadstone commented: “The surplus for Defined Benefit schemes appears to have settled at around the £440bn mark, a sharp increase from the aggregate deficit we saw prior to 2021. With higher gilts yields seeming to be sticking around and some positive news around inflation, pension scheme trustees and sponsors can approach the end of 2023 with a degree of confidence.
“The overall positive funding has made de-risking and buy-out more achievable for many schemes, leading to busy insurance market. Consequently, many pension scheme clients are working hard on their data and understanding their risks to make them attractive for insurers. Early work on administration and data management can be the difference between a scheme achieving a transaction or not in a competitive environment for de-risking.”
Kieran Mistry, Senior Business Development Manager at Standard Life, part of Phoenix Group, comments:
“With the Bank of England holding interest rates at 5.25% for the second time, funding positions for UK defined benefit have also remained encouragingly stable throughout October. The aggregate section 179 funding ratio for the 5,131 schemes in the PPF 7800 Index remained at 147.5 per cent at the end of October 2023, compared to the end September 2023.
“As we approach the end of the year, 2023 looks on track to be a record-breaking year for the pensions de-risking market, with many schemes finding themselves ahead of schedule on their endgame journey. However, trustees will likely be continuing to closely watch inflation expectations and activity in the gilt market. Insurance remains the gold standard for schemes wishing to lock down risk and secure liabilities, and we expect the buoyant market to continue into 2024 and beyond.”
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