Jaime Norman, Senior Actuarial Director at Broadstone, said: “August was characterised by notable increases in gilt yields whilst equity valuations also improved. While the surplus saw a notional dip, the overall picture remains of an extremely healthy defined benefit pension scheme environment with many already locking in the gains to their funding position. It means that heading into the busier second half of the year for pension scheme de-risking, many pension schemes will be in a strong position to approach what is a competitive insurance market. However, growing insurer capacity and widening options around run-on and access to surplus should mean that pension scheme trustees have a wide variety of options to secure their members’ benefits. Market volatility remains present so trustees must continue to monitor their funding position and investment strategies to ensure they can achieve their long-term objectives.”
Charlotte Fletcher, Business Development Manager at Standard Life: "Defined benefit pension funding levels remained robust throughout August, with the aggregate section 179 funding ratio showing continued strength. For the 4,969 schemes in the PPF 7800 Index, the funding ratio rose to 128.1 per cent, up from 127.7 per cent at the end of July. While the sharp rise in gilt yields over 2022 and 2023 was the main driver of improved scheme funding positions, yields have continued to gradually increase, contributing to a modest boost in funding levels. With funding positions stabilised at elevated levels, many trustees are weighing up their endgame strategies, with a focus on securing member benefits through a bulk purchase annuity. Looking ahead, trustees have many considerations to weigh up, particularly given the emerging regulatory framework around surplus management and evolving landscape being shaped by the Pension Schemes Bill. However, while new opportunities may arise, there is always a potential risk to delaying for the unknown. This is something trustees are mindful of and supports the strong demand for insurance-based end-game solutions we’re seeing in the market.”
Vishal Makkar, Managing Director, UK Wealth Consulting at Gallagher: “Although today’s PPF 7800 index shows a slight dip in the overall aggregate funding, the UK’s DB schemes are still in a healthy surplus. Right now, it stands at £238.9bn, driven in part by more volatile asset performance. Nevertheless overall market conditions have maintained strong funding levels across most DB schemes throughout August, as markets continue to price in persistent inflation and elevated government borrowing. This resilience is significant as trustees prepare for the new DB funding code, which embeds low-dependency funding requirements and places greater emphasis on long-term risk management. While buyout remains an important benchmark for many schemes, the current surplus landscape – combined with proposed reforms to surplus extraction – is prompting a reassessment of endgame strategies. The challenge for trustees is to decide whether to secure their position now or to run on and manage surplus actively, potentially using it to improve member benefits or support other objectives including possibly those of the sponsor. That decision will hinge on the scheme’s governance strength, market timing and a clear communication strategy with members and sponsors. The window for action is now while gilt yields are still supportive, and before market dynamics shift again.”
PPF publish latest PPF7800 figures for August 2025
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