The total deficit of all U.K. corporate defined benefit funds fell 11.5% in the month of October to £154 billion ($202.9 billion), said an update by JLT Employee Benefits.
The consultant said deficits also fell by 45.4% over the 12 months ended Oct. 31.
The funded level improved to 91% as of Oct. 31, up from 90% as of Sept. 30 and 84% at Oct. 31, 2016. Assets grew 1.4% for the month and 3.9% for the year to total £1.586 trillion; liabilities grew slightly over the month, by 0.1%, but fell 3.8% over the year ended Oct. 31 to £1.74 trillion.
FTSE 100 and FTSE 350 companies also saw their deficits fall and improvements in funded levels. For FTSE 100 companies, deficits totaled £39 billion as of Oct. 31, down 13.3% in October and down 58.9% for the 12-month period. The funded level of these funds improved to 95% from 94% a month previous and 87% as of Oct. 31, 2016.
FTSE 350 company deficits totaled £49 billion, down 14% for the month and 56.3% for the year. Funded levels improved to 94%, up from 93% as of Sept. 30 and 87% as of Oct. 31, 2016.
"Despite concerns over rising inflation, buoyant equity markets have continued to deliver good news for DB pension schemes as pension deficits continue to drift lower," said Charles Cowling, director at JLT Employee Benefits, in a statement accompanying the update. "This month has seen the consumer prices index measure of inflation hit 3% for the first time since 2012, largely due to the weak pound after the Brexit vote. As a result, the governor of the Bank of England, Mark Carney, said that it was 'more likely than not' that he would soon be writing to the Treasury to explain his failure to keep inflation within 1% of its target of 2%."
Mr. Cowling added that Mr. Carney had given "further indications of an impending interest rate rise," which will be seen as a relief for funds as it will reduce the value attached to their liabilities. "As a result, many will be hoping to see continued reductions in pension deficits," said Mr. Cowling.
Separate figures published by PricewaterhouseCooper showed the deficit of the about 5,800 corporate DB funds, based on its Skyval index, fell 10.9% in October to £410 billion on a funding basis. The funding basis is the target used by pension fund trustees to determine company cash contributions, said PwC.
Using index data of assets and liabilities, calculation shows the funded level of these funds was 79%, compared with 76.8% at the end of September.