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Pension Funds

U.K. pension funds see deficit fall for quarter, year

The total deficit of all defined benefit funds covered by the Pension Protection Fund's 7800 index fell 40.7% for the month and dropped 59.6% for the year ended Sept. 30, to 38.7 billion ($50.4 billion).

An update by the London-based lifeboat plan said the funding of the plans improved to 97.7% as of Sept. 30, from 96.1% as of Aug. 31. That compared with 94.2% as of Sept. 30, 2017.

For the month, a 0.8% drop in assets to 1.615 trillion was more than offset by a 2.3% fall in liabilities, to 1.65 trillion. Conventional 10-, 15- and 20-year gilt yields rose 15 basis points, 14 basis points and 14 basis points, respectively. Index-linked 5-to-15-year gilt yields increased 9 basis points.

For the year assets grew 4.6% to 1.544 trillion, and liabilities increased 0.8% to 1.64 trillion. The FTSE All-Share index was up 1.1% and the FTSE All-World index was up 7.6% over the year. Conventional 10- and 15-year gilt yields increased 17 basis points and 4 basis points respectively; 20-year gilt yields fell 1 basis point for the period. Index-linked 5-to 15-year gilt yields were up 11 basis points, the update said.

The proportion of funds in deficit improved to 61.5%, from 63.7% as at Aug. 31, and 66.2% as at Sept. 30, 2017. The index covers 5,588 pension funds.