The total deficit of U.K. defined benefit funds covered by the Pension Protection Fund's 7800 index decreased to £35.4 billion ($46 billion) at the end of December, from a deficit of £71.1 billion at the end of November.
The position worsened from a year ago, when the pension funds in the London-based PPF's index recorded a deficit of £31.9 billion as of Dec. 31, 2018, according to a report Tuesday from the PPF.
The funding ratio of pension plans improved over the month to 98% as of Dec. 31 from 96.1 % as of Nov. 30. The funding ratio was flat over the year, the update said.
Assets decreased 0.2% during December but rose 10.7% for the year ended Dec. 31, to £1.74 trillion. For the month, liabilities fell 2.2% over the month but increased 10.7% for the year to £1.775 trillion.
The PPF said in its update that the FTSE All-Share index increased 3.3% for the month and improved 19.2% for the year ended Dec. 31. Five- to 15-year index-linked gilt yields climbed 11 basis points in December but fell 33 basis points over the year.
As of Dec. 31, 58% of the 5,450 pension funds covered by the index had a deficit, compared with 61% as of Nov. 30. A year ago, 60% of the 5,450 pension funds covered by the index had a deficit.
“Funding level increase was driven by positive performance from risk assets and rising yields causing liability values to fall by about 2.2%," said Sion Cole, head of BlackRock's U.K. fiduciary business, in an emailed comment. “December’s increase in equity markets brought to a close a strong year for equities globally, with the MSCI World index up by about 24% and the FTSE 100 up 12% over the year.”