The total deficit of U.K. defined benefit funds covered by the Pension Protection Fund's 7800 index decreased to £103 billion ($133 billion) at the end of October, from a deficit of £149 billion at the end of September.
The position worsened from a year ago, when the pension funds in the London-based PPF's index recorded a deficit of £67.2 billion as of Oct. 31, 2018, according to a report Tuesday from the PPF.
The funding ratio of pension plans also improved over the month to 94.4% as of Oct. 31, from 92.2% as of Sept. 30. As of Oct. 31, 2018, the funding ratio was 95.9%, the update said.
Assets fell by 1.7% during October and rose 9.5% for the year ended Oct. 31, to £1.74 trillion. For the month, liabilities fell 3.9% and increased 11.3% for the year to £1.843 trillion.
The PPF said in its update that the FTSE All-Share index fell 1.4% for the month and improved 6.8% for the year ended Oct. 31. Five- to 15-year index-linked gilt yields climbed 32 basis points in October but fell 67 basis points over the year.
As of Oct. 31, 63.5% of the 5,450 pension funds covered by the index had a deficit, compared with 65.8% as of Sept. 30. A year ago, 37.2% of the 5,450 pension funds covered by the index had a deficit.
"As political parties in the U.K. set out their manifestos for the December general election, there is uncertainty over the path of gilt yields over the next few years," said Sion Cole, managing director at BlackRock, in an emailed statement in response to the report. "Will the trailed end of austerity mean the market is flooded with new gilt issuance and a rise in yields? Or will a hung Parliament spook investors and lead to a sharp rise in gilt prices as they retreat to traditional safe havens? Whatever your view, it's unlikely to be high conviction. We have been increasing our liability hedges over 2019, and now is not the time to start cutting these back."
