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Pension Funds

Funding levels drop for funds in PPF 7800 index in August

The total deficit of defined benefit funds covered by the Pension Protection Fund's 7800 index increased 22.4% in August to 220.4 billion ($284.8 billion), as growth in liabilities outpaced that in assets.

For the 12 months ended Aug. 31, however, the deficit of these funds fell 46.6%.

An update by the London-based U.K. lifeboat for the pension funds of insolvent companies said the funded level was 87.6% as of Aug. 31, falling from 89.4% as of July 31. However, the funded level improved from 78.3% as of Aug. 31, 2016.

Assets grew 1.9% for the month and 4.5% for the year to 1.553 trillion. The FTSE All-Share index was up 10.2% over the year. Figures for the month were not available.

Liabilities, however, grew 4% in August to 1.773 trillion. Conventional 15-year gilt yields fell by 16 basis points, and index-linked five- to 15-year gilt yields fell 23 basis points over the month of August.

Compared with August 2016, 15-year gilt yields were up 48 basis points and index-linked five to 15-year gilt yields were up 4 basis points. The liabilities of the pension funds covered by the PPF index fell 6.6% over the period.

The proportion of funds in deficit grew to 73.5% as of Aug. 31, compared with 71.7% at end-July. At Aug. 31, 2016 the proportion of funds in deficit was 83.4%.