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U.K. pension fund deficits fall in January, down 29% over past year

The total deficit of all U.K. corporate pension funds in the London-based Pension Protection Fund’s 7800 index decreased 12.2% over January to £196.5 billion ($246.4 billion) and was down 29% over the past 12 months.

The funded level of these funds improved to 88.2% as of Jan. 31, compared with 86.8% as of Dec. 31 and 82.3% at Jan. 31, 2016.

Assets fell 0.6% over the month to £1.467 trillion, but were more than offset by a 2.2% decrease in liabilities, to £1.663 trillion. For the year, asset growth of 14% bested a 6.3% increase in liabilities.

In January, conventional 15-year gilt yields rose 17 basis points, and index-linked yields were up 1 basis point. For the year, 15-year gilt yields were down 19 basis points, and index-linked were down 70 basis points. The FTSE All-Share index fell 0.4% over January and gained 15.7% over the year ended Jan. 31. The PPF uses the annualized yield on the FTSE U.K. gilts 15-year fixed-interest index, and the index-linked equivalent, for its analysis.

The number of funds in deficit fell to 73.6% as of Jan. 31, compared with 74.9% at the end of December. At both dates the universe covered 5,794 pension funds. As of Jan. 31, 2016, 80.9% of the 5,945 funds covered by the PPF's universe were in deficit.