Vishal Makkar, Managing Director, UK Wealth Consulting at Gallagher: “Although the overall aggregate funding has dipped, the fact remains that DB schemes are largely performing well in the UK, with many sitting in a comfortable surplus. This buoyant uptick and the following stability will create a positive environment for members to receive their returns. Although pensions were not a centrepiece in the Spring Statement, the government will still look to the nation’s rich supply of DB pension funds to support its fiscal policy for economic renewal. As we know, the government has relaxed rules on accessing pension surpluses, which will allow funds to be released and reinvested into national infrastructure projects. But in any case, the top priority here will be for trustees to ensure members are protected. In the current macroeconomic climate, trustees must take advantage of all their options. Although increased flexibility in is positive, trustees must still contend with a range of unknown variables, including the upcoming Pensions Scheme Bill. If inheritance tax is revised to include unspent pension benefit, many scheme members will want guidance on protecting their long-term investments. There are many reforms in the pipeline, and so it is paramount that trustees keep open lines of communication with sponsors and members until the government’s plans are formally set in stone.”
Sarah Elwine, Actuarial Director at Broadstone, said: “Defined benefit pension scheme funding levels saw a notable deterioration in March as Government bond yields rose off the back of the Spring Statement. The start of April has seen significant market volatility following President Trump’s announcement of wide-ranging and higher-than-expected tariffs. These market movements are likely to have impacted funding levels and the time horizon of this turbulence also remains uncertain depending on negotiations and retaliations. This volatility emphasises the benefits of a matching investment strategy for schemes. Whilst we wouldn’t expect that trustees would need to take any immediate actions, they may want to consider in due course whether employer covenant for their schemes has been affected by the introduction of tariffs, particularly given the increase in employer National Insurance and minimum wage changes also coming into effect this month. Regular strategic monitoring will, of course, continue to be important in helping Trustees to understand any impacts that do require action moving forward as the macro-economic landscape shifts.”
Alex Oakley, BPA Transaction Manager, at Standard Life, part of Phoenix Group: Funding levels for UK defined benefit pension (DB) schemes dropped in March. The aggregate section 179 funding ratio for the 4,969 schemes in the PPF 7800 Index now stands at 124.7 per cent at the end of March 2025, compared to 126.1 per cent at the end of February 2025. While there was some wider market volatility during this period, the overall impact on the funding positions of DB schemes has been fairly muted and we expect the vast majority of schemes will have adapted their investment approaches to protect against such risks. With continued market volatility following global trade tariffs, monitoring investment strategies will be key for trustees and schemes to ensure protection against market turbulence and maintain momentum towards long-term endgame objectives. For schemes in a strong funding position, locking in the opportunity by securing member benefits will help bring certainty in an evolving market environment.”
PPF publish the latest PPF 7800 figures for March 2025
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