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Pension Funds

PPF’s 7800 index deficit increases 4% in month, but funding remains at 96%

The total deficit of U.K. corporate pension funds covered by the Pension Protection Fund's 7800 index increased 3.9% for the month but was down 58% for the year ended Aug. 31, to £65.3 billion ($85 billion).

The PPF said in an update Tuesday that the funding level of these plans decreased to 96.1% as of Aug. 31 from 96.3% a month earlier, but increased from 91% a year earlier.

Assets grew 0.4% in August and 3.3% for the year to £1.62 billion. The FTSE All-World index was up 8.2% for the year.

Liabilities increased in August by 0.5% to £1.69 billion, but fell 2.2% over the past year. Conventional 10- and 15-year gilt yields rose by 3 basis points and 1 basis point, respectively, while 20-year gilt yields were unchanged over the month. Index-linked five-to-15-year gilt yields rose by 3 basis points in August.

Over the past year, 10-, 15- and 20-year gilt yields were up 34 basis points, 15 basis points and 5 basis points, respectively. Index-linked five- to 15-year gilt yields were up 33 basis points for the year, the update said.

The percentage of funds in deficit increased to 63.7% as of Aug. 31, compared with 63.3% a month earlier, but improved over the year from 70.2%.