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U.K. fund deficits rise in February as liabilities continue to grow

The total deficit of defined benefit funds covered by the Pension Protection Fund’s 7800 index increased 23.3% over February to £242 billion ($300.8 billion).

For the year ended Feb. 28, deficits fell 17.8%.

A 3% increase in assets in February to £1.511 trillion was more than offset by a 5.4% jump in liabilities to £1.753 trillion. The funded status of these funds worsened to 86.2% in February, compared to 88.2% at the end of January.

For the year, assets grew 16.1%, more than offsetting a 9.9% increase in liabilities. The funded status is up from 81.5% at the end of February 2016.

The PPF said in an update that conventional 15-year gilt yields fell 28 basis points over February and 33 basis points for the year. Index-linked over 15-year gilt yields fell 7 basis points in February 2017 and were down 75 basis points over the year. The FTSE All-Share index rose 2.5% in February and 18.2% over the year. 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 proportion of funds in deficit increased to 75.6% at the end of February, compared with 73.6% at the end of January. However, the proportion fell compared with February 2016, when 81.5% of funds were in deficit.