Pensions - Articles - Return to rising interest rates improves scheme funding

 The Broadstone Sirius Index – a monitor of how various pension scheme strategies are performing on their journeys to self-sufficiency – posts its latest update.

 The Broadstone Sirius Index reports its October update, finding improvement in defined benefit pension scheme funding.

 The 50% hedged scheme which last month reached full funding on a self-sufficiency basis, is now in surplus improving from 100.3% to reach 101.8%, with its surplus increasing by £0.4m to £0.5m. The fully hedged scheme held its funding level with only a slight reduction to 69.4% from 69.5%. However, rising rates reduced assets and liabilities so the deficit fell by £0.2m to £8.4m.

 Chris Rice, Head of Trustee Services at Broadstone, commented: "Thankfully, in the face of a highly anticipated Autumn Budget on October 30th, scheme funding remained largely stable throughout the month. There were steady rises in interest rates in October, reducing liabilities and hedging assets. This caused the fully hedged scheme to hold its funding level as expected, but the half-hedged scheme continued to improve its funding level with a reasonable surplus now being disclosed.

 “Recent improvements in the under-hedged scheme over the past few months serve as a reminder to trustees of partially hedged schemes that their funding status may be stronger than anticipated, making this a potentially opportune moment to consider enhancing their protection.”