The total deficit of U.K. defined benefit funds fell 6.4% in March to £302.1 billion ($434.8 billion), as liabilities decreased and assets rose, showed data from the Pension Protection Fund 7800 index.
Over the 12-month period ended March 31, deficits of the 5,945 pension funds covered by the index increased 23.7%.
The funding level improved to 81% from 79.8% as of Feb. 29. However, it dropped from 84.2% as of March 31, 2015.
Of the 5,945 pension funds in the index, 82.3% were in deficit vs. 83.4% in February. As of March 31, 2015, when the index covered 6,057 pension funds, 77.2% were in deficit.
Assets increased 1.2% to £1.29 trillion over the month, with the FTSE All-Share index increasing 1.5% over that period. For the year, the index was down 7.3%, and assets for these pension funds fell 0.8%.
Liabilities fell 0.3% in March to £1.59 trillion, but increased 3.1% vs. March 31, 2015. Conventional 15-year gilt yields increased six basis points, while index-linked 15-year gilt yields fell three basis points. For the year, 15-year gilt yields were down two basis points.
Separately, a report released Monday by JLT Employee Benefits found that FTSE 100 companies' defined benefit plans have seen their bond allocations increase by about £25 billion to a record £315 billion over the year ended Sept. 30.
The research showed this increase was driven primarily by investment returns rather than net new inflows to bond strategies. The average pension fund allocated 59% to fixed income as of Sept. 30, vs. 56% a year previous. JLT said 59 FTSE 100 companies have more than 50% of their pension fund assets allocated to bonds.