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DEFINED BENEFIT

U.K. pension funding improves in May

The total deficit of defined benefit funds covered by the Pension Protection Fund's 7800 index fell 5.4% for the month but increased 8.7% for the year ended May 31 to £232.3 billion ($298.3 billion).

The funding ratio of these plans improved to 86.8% from 86% as of April 30 and 86.3% as of May 31, 2016.

Conventional 15-year gilt yields fell 4 basis points and index-linked 15-year gilt yields increased 5 basis points over the month of May. Over the year, 15-year gilt yields were down 47 basis points and index-linked 15-year gilt yields fell 76 basis points. This translated into a 0.3% increase in liabilities in May and 12.9% for the year, to £1.76 trillion.

The PPF said total assets increased 1.3% over the month to £1.533 trillion as the FTSE All-Share index increase by 3.9%. Over the year, the FTSE All-Share index was up 20% and total assets grew 13.6%.

The proportion of pension funds in the index that were in deficit as of May 31 was 74.4%, down from 75.8% as of April 30. That compared with 77.1% as of May 31, 2016.