Pensions - Articles - Steady scheme funding builds strong end game foundations

 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 November update which finds marginal moves in both its 50% and fully hedged schemes amid calm markets through the month despite the aftermath of a rocky Autumn Budget and the results of the US election. Funding levels for the 50% hedged scheme saw a slight decrease from 101.8% to 101.4% with a £0.1 million reduction in its surplus.

 Contrastingly, the fully hedged scheme moved in the opposite direction with a small improvement from 69.4% to 69.5%, seeing a similar sized £0.1 million reduction in its deficit. Both schemes saw minimal movements despite an active start to November for markets with a nervous reaction to the UK’s Budget and the victory for Donald Trump in the US election. It follows a year that has seen many schemes assessing their end game options in the light of a buoyant bulk annuity market and increasing focus on run on.

 Chris Rice, Head of Trustee Services at Broadstone, said: "As we move towards the end of 2024, we can reflect on another year of DB schemes actively considering their futures. Competition in the bulk annuity market has been strong, innovation has been gathering pace and new players have entered the market to help schemes of all sizes achieve their objectives via a growing number of endgame options. Meanwhile the continued funding strength of schemes has re-opened conversations around run-on and surplus extraction and although there was no further comment on this in the recent Mansion House speech, it remains a current issue for trustees and sponsors.”