The aggregate surplus of U.K. defined benefit funds covered by the PPF 7800 index decreased slightly in December, by 1.4% to £376.7 billion ($454.2 billion).
The surplus more than doubled for the year ended Dec. 31, from £129.3 billion, according to a Tuesday update from the Pension Protection Fund, London. The PPF is the lifeboat fund for pension funds of U.K. insolvent companies.
The aggregate funding ratio was 136.5% as of Dec. 31, compared with 133.7% as of Nov. 30.
Assets fell by 4.3% for the month and 22.5% for the year to £1.41 trillion, while liabilities fell 6.2% vs. figures as of Nov. 30, to £1.03 trillion.
For the year, liabilities fell 53.4%, and the funding ratio increased from 107.7% as of Dec. 31, 2021.
Five-to-15-year index-linked gilt yields were up 45 basis points in December and increased by 312 basis points over the year.
The majority of the 5,131 pension funds covered by the index were in surplus as of Dec. 31, at 86.6%, up slightly from 85.5% as of Nov 30. As of Dec. 31, 2021, when the index covered 5,215 pension funds, 41.3% were in surplus.
"The primary driver of the increase in estimated surplus was the rise in government bond yields through December, which meant that the estimated value of liabilities fell by £68.5 billion," Lisa McCrory, PPF chief finance officer and chief actuary, said in the release.
"Bond yields rose in December as central banks, particularly in the U.S. and eurozone, reiterated that policy rates are likely to remain at higher levels for some time. In addition, the Bank of England sold £15 billion of the holdings that they had bought in the market intervention in September/October, representing a material increase in supply," she added.
The PPF has £39 billion in assets.